in brief in the news
By David McKay10 finweek 24 October 2019 http://www.fin24.com/finweekWhile the debate around coal production remains sensitive, revamping the Overvaal tunnel on the coal line in
Mpumalanga can no longer be ignored. It’s in bad shape and a rebuild is not just an issue of ensuring a reliable
transport route – it’s about preventing a potential collapse in infrastructure.Coal train heading for disaster
s
afety concerns about a passage
of Transnet Freight Rail (TFR)
line operating near Ermelo in
Mpumalanga province looks like
it may trump the morality of producing more
coal in the country.
Speaking at a recent conference in
Johannesburg, Exxaro Resources’ general
manager for coal, Nombasa Tsengwa, said
there was an urgent need to expand
the Overvaal tunnel – if only
because the project would
avoid a potential collapse
of the infrastructure.
Until recently, the
primary reason for
expanding the Overvaal
tunnel to two rail lines
from the current one
was in order to maximise
coal railings to Richards
Bay, some 850km away in
KwaZulu-Natal.
In so doing, more black-
owned coal miners would
have access to the export
coal market through
the Phase V expansion
of Richards Bay Coal
Terminal (RBCT), the
export facility where
ownership is largely
divided between blue-
chip companies such as
Glencore, South32 and
Exxaro itself.
But the tunnel is
in need of a revamp.
Tsengwa said the rail line
posed a serious safety
integrity issue, “of which
that structure is a big
risk”.
“If we were to have
that structure collapse in
any way, it would be a calamity to us on the
coal line. It makes sense for the reliability and
safety and flow of coal, and the fact that the
Phase V participants have got to participate
as well,” she added.
Derailments and even sabotage have
been a feature of Transnet’s recent history,
especially on the iron ore line that runs fromthe Northern Cape to Saldanha Bay. But the
coal line is a piece of infrastructure rebuild it
can’t afford to ignore.
“It looks like the tunnel is disintegrating,”
a banking source told finweek. “The tunnel
is about 50 years old and it’s probably been
running at such a density that, over time, it’s
hard to maintain.”
Economically, there’s a feeling that SA
needs to liberate as much coal as it
can before world markets begin
to shut off, not to mention
funding mechanisms for
new mines.
Government’s
inclusive approach
in the Integrated
Resource Plan (IRP),
the energy blueprint
that was imminent at
the time of writing, also
puts fresh emphasis on
new coal production.
There’s also a mismatch
between the installed
capacity of RBCT,
expanded to 91m tonnes
of coal exports a year
(Mt/y) as far back as
2005, against which
Transnet’s coal line
capacity is only 81Mt/y,
a number it has failed to
achieve.
“I guess the longer
we take on a decision to
expand the RBCT line,
that raises the question
of whether we would
ever be able to get to
the 91Mt/y as the South
African industry,” said
July Ndlovu, CEO of
Anglo Coal, a business
unit of Anglo American.
“A number of things are beginning to come
into play – access to funding is becoming
an issue; banks are beginning to say they
will fund existing mines, but maybe not new
projects. Therefore, our ability to expand
the South African production is actually
beginning to be, in my mind, quite difficult.” ■
Photo: Archive [email protected]
WHY
DITCHING
COAL ISN’T
CLEAR-CUT
Anglo American said it had no intention
of distancing itself from the World Coal
Association (WCA), of which it is a
member.
“We took a conscious decision that is
probably in our best interests to remain
in the World Coal Association so that
we can shape both policy and debate
about what is the right way to transition
into the future,” said July Ndlovu, Anglo
Coal CEO.
Earlier this month, the Church of
England Pensions Board, which has
been active in lobbying for safer mining
practices and for more aggressive
adoption of climate control measures by
the sector, urged BHP to distance itself
from lobby groups inconsistent with
global climate change limitation. The
matter has been set down as an item in
its annual general meeting.
Ndlovu’s comments are consistent
with Anglo American policy as far back
as April in response to Climate Action
100, a lobby group, when it said in an
industry association audit that industry
associations allow for best practice,
WCA included.
The WCA had also committed to the
Paris Agreement, which is nuanced such
that it sets different energy outcomes
for developed and developing markets,
recognising issues of ‘just transition’ are
required in places such as SA, said Anglo
American.
Said Ndlovu: “Quite often, what
we also miss is, even in the Paris
Accord, at least 24 of the countries that
have committed their own voluntary
reduction targets include coal as part of
that mix going forward. That is often lost
in the debate.” ■“A number of things
are beginning to come
into play – access to
funding is becoming
an issue; banks are
beginning to say they
will fund existing
mines, but maybe not
new projects.”