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Shifting sands

World Coal,

At the 33rd Coaltrans world coal conference held in Berlin, Sipho Nkosi, CEO of Exxaro Resources Ltd, explained how the company and the South African coal mining sector as a whole, was adapting to changing market trends and industry developments.

Export markets

Exxaro, the second largest producer of coal in South Africa, has previously based its operations in the Mpumalanga coalfields: a region rich with coal and the base of operations for Anglo American, Ingwe and other coal miners. With a coal rail line leading from the coalfields to the port of Richards Bay, Exxaro used the infrastructure to target the European coal market.

However, Nkosi said that in response to both global and domestic industry trends, Exxaro would begin to explore new mining locations and new markets.

Walberg coalfields

Nkosi told delegates at Coaltrans that future coal production would be sourced from Waterberg, rather than Mpumalanga, while the primary export location for the coal produced there would be transported to Asian, rather than European, markets.

Nkosi stressed that the reason for change was not due to labour issues within the South African mining sector that have been so publicised in various media outlets. “The coal business has not been as affected as the platinum and gold sectors,” Nkosi said. “We’ve had a volatile labour situation, but there is more discussion with labour today. We have created the employee share scheme, which brings a lot of stability. Employees are invested in the business.”

The Waterberg coalfields hold an estimated 64% of South African coal reserves, however, setting up mining operations there is not without its challenges, as a current lack of infrastructure means transport to export ports becomes increasingly difficult. Nkosi therefore said that Exxaro would continue developing and improving rail connections that could take coal mined at Waterberg to export terminals (phase 5) at Richards Bay Port. He said the company was hopeful the terminal at Richards Bay would be able to handle a capacity of 110 million tpa of coal by 2016/17.

South African coal industry development plan

Nkosi outlined a development plan and coal strategy for both Exxaro and the South African coal industry:

  1. There is the need to invest in energy, metal and mineral resource commodities that generate economic terms of 1.5 times the cost of capital.
  2. Companies must develop market insights for products on sale and appropriate technology throughout the value chain for added value and competitive market advantage.
  3. It is vital to extract industrial-application energy, metal and mineral commodities from diverse geographies by using a combination of a company’s own capabilities and relevant business and political partnerships.

Nkosi stressed that “Technology innovations must continue,” for the coal industry to continue to grow.

Like many delegates at Coaltrans, Nkosi saw much potential in the future coal industry and market, explaining that coal was a vital part of any energy future. “Coal is here to stay,” Nkosi said, “not only in South Africa, but across the globe.” However, he added the caveat that “It is important to utilise coal for the benefit of countries across the world.”

Written by Sam Dodson

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