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south african coal Coal Remains a Vital Link for South African Economy As one of the world's leading coal exporters, an African leader realizes it must also make investments to support domestic demand BY GAVIN DU VENAGE In spite of its size, the South African coal industry is not a happy place right now. A slew of legislative changes are gathering like clouds on the horizon. (Photo: BHP Billiton) The Valley of a Thousand hills gets its name from the endlessly rolling countryside that dominates South Africa's north eastern corner. Tourists flock to it, drawn to its wild greenery and to dip into its bloodied history of battles between British troops and Zulu warriors, of Boers versus Brits, and Boers against the Zulus. It's across these hills that trains a mile and a half long must crawl, hauling 200 wagons of coal at a time. At any given time a section of the train is going up, another section down, and still another part is climbing upward again. "It's like a very long centipede crawling over an egg punnet. It's slow and an accident can happen at any time," said Abri Claasen, a long time driver on the route. "The job is as difficult as piloting a Jumbo." The trains labor between the dozens of mines on the coalfields of the Highveld in the north, and Richards Bay, the world's largest coal terminal, in the east. The 580km line is symbolic of the position the South African coal industry finds itself in today, faced as it is with as many ups as there are downs. With all of these difficulties, it still has to serve a growing export market as well as supply South Africa's own voracious need for energy. 58 www.coalage.com The country is by no means the largest producer in the world—it ranks sixth (behind China, U.S., India, Australia and Indonesia), according to a study by Anton Eberhard, head of the Management Program in Infrastructure Reform at the University of Cape Town's Graduate School of Business. However, it is one of the cheapest producers, and still has vast untapped reserves and the potential to substantially expand its exports. Economically recoverable reserves are estimated at anywhere between 15 billion and 55 billion metric tons (mt), of which 96% is bituminous coal. This picture could change, however, as extensive exploration in the Waterberg region in the north of the country points to substantial reserves of coking coal. For now most production is in the Central Basin around the towns of Witbank, Vryheid and Ermelo. This region is mature and is expected to peak within the next decade; already some of the older deposits are being mined out. What makes the region's coal seams attractive is that they are relatively thick and close to the surface, making for as ideal mining conditions as they can get. A quarter of the bituminous reserves lie between 15 m and 50 m below the surface. Most of the rest lie somewhere between 50 m and 200 m. More than one-half the seams are up to 6-m thick. As a result, production is evenly split between opencast and shallow underground mines. Ash content is high and exported coal usually requires washing to keep this below 15%. Because the mines are aging, calorifc values have also declined somewhat: from 26 megajoules per kilogram (11,177 Btu/lb) a decade ago, to 24.7 MJ/kg (10,619 Btu/lb) currently, noted Eberhard. The sulfur content ranges between 0.6%-0.7%. The thermal coals used for domestic power and synthetic fuel production have a much lower calorific value, and higher ash content. These were generally seen as too poor a quality to export, and reserved for the local power utility, Eskom. However, in recent years demand from foreign buyers has grown. India in particular has purchased large quantities of low-grade coal as its power plants, like those of Eskom, burn high-ash coals. Duff, or discarded coal, is mounting up at a rate of 60 million mtpy, to a cumulative stockpile of around 1 billion mt. There has been talk of turning discarded April 2013