A LONG-awaited review that has major implications for mining laws shows that South Africa’s coal reserves and resources have risen 21% since last estimated in 1987.
The release of the review, a copy of which Tiso Blackstar has seen, has apparently been held back since 2012‚ awaiting Mineral Resources Minister Susan Shabangu’s sign-off.
The Council for Geoscience was given the task of undertaking the review‚ and power utility Eskom and the Department of Mineral Resources sponsored it.
The findings of the review contradict Eskom’s contention that its future security of coal supply is under threat because of potential shortages.
Instead‚ it supports the repeated view of coal industry executives that there are enough coal resources available in South Africa to supply both the power utility and export markets.
The Council for Geoscience used its own database and inputs from various consulting geologists.
Further‚ it used “information supplied by the mining industry under a confidentiality agreement and a formal protocol” to ensure competition laws were not breached.
The statistics and information were compiled during a two-year period ending in November 2011‚ and the report is dated 2012.
The new estimate of 66.7 billion tons run-of-mine (ROM) compares with the previous estimate of 55.3 billion tons taken in 1987. ROM refers to raw coal potentially available for delivery to coal preparation facilities or for stockpiling after it has been mined.
The increase in reserves is despite the fact that 7.5 billion tons of coal have been mined during the 24-year period between the two estimates.
The report attributes this mainly to increased reserve and resource estimates for the Waterberg‚ Tuli and Soutpansberg coalfields following more extensive exploration work.
Eskom is worried about growing competition from India for the low-grade coal that most of its power stations burn and over which it has until now held a monopoly on demand as there were no other large-scale consumers.
The power utility wants the government to declare coal a “strategic mineral” under the Minerals and Petroleum Resources Development Act (MPRDA) Amendment Bill.
This has sparked concern among some mining executives that the government could impose price controls on domestic coal sales or limit export volumes through physical quotas.
Further‚ they worry that export taxes might be introduced should coal be declared a strategic mineral.
But the Chamber of Mines recently downplayed the possibility of price controls and export taxes.
It has declared its support for the final draft of the MPRDA Amendment Bill.
Mining legal expert Peter Leon of law firm Webber Wentzel said the chamber had done a “commendable job” in tackling many of the problems with the bill.
But he was concerned about the power it granted the mineral resources minister “to restrict exports of designated minerals”.
Chamber of Mines president Mike Teke on Wednesday declined to comment because Shabangu had not yet signed off the Council for Geoscience’s review report.
Although not yet released‚ it is already proving controversial.
“This information is important and it needs to be made public‚” said one industry source.
Another authoritative coal sector source said the report probably overstated South Africa’s real position in respect of reserves and resources because it did not take commercial aspects into account sufficiently.
These aspects included coal quality and railage costs from the Waterberg to export ports or Eskom’s power stations in Mpumalanga.
Further‚ there was a need to develop infrastructure to supply more water to the Waterberg so that the region’s predominantly low-grade coal could be upgraded to a saleable product.
That was done through “washing” the coal in preparation plants to improve product quality.
The commercial factors could result in some coal reserves not being exploited as that could not be done profitably.
Significantly‚ the report does not comply with the South African code for the reporting of exploration results‚ mineral resources and mineral reserves (Samrec).
The code lays down the standards mining companies listed on stock exchanges must meet.
The authors of the Council for Geoscience report acknowledge the noncompliance with the code.
“As it was impossible for this report to comply to the Samrec‚ and by extension the South African National Standards 2011 code consistently‚ it was endeavoured to comply with this code whenever possible.
“The report was not prepared for driving potential investments but as a scientific report,” it said. — BDlive
Coal reserves study gives lie to Eskom supply scare
The release of the review, a copy of which Tiso Blackstar has seen, has apparently been held back since 2012‚ awaiting Mineral Resources Minister Susan Shabangu’s sign-off.
The Council for Geoscience was given the task of undertaking the review‚ and power utility Eskom and the Department of Mineral Resources sponsored it.
The findings of the review contradict Eskom’s contention that its future security of coal supply is under threat because of potential shortages.
Instead‚ it supports the repeated view of coal industry executives that there are enough coal resources available in South Africa to supply both the power utility and export markets.
The Council for Geoscience used its own database and inputs from various consulting geologists.
Further‚ it used “information supplied by the mining industry under a confidentiality agreement and a formal protocol” to ensure competition laws were not breached.
The statistics and information were compiled during a two-year period ending in November 2011‚ and the report is dated 2012.
The new estimate of 66.7 billion tons run-of-mine (ROM) compares with the previous estimate of 55.3 billion tons taken in 1987. ROM refers to raw coal potentially available for delivery to coal preparation facilities or for stockpiling after it has been mined.
The increase in reserves is despite the fact that 7.5 billion tons of coal have been mined during the 24-year period between the two estimates.
The report attributes this mainly to increased reserve and resource estimates for the Waterberg‚ Tuli and Soutpansberg coalfields following more extensive exploration work.
Eskom is worried about growing competition from India for the low-grade coal that most of its power stations burn and over which it has until now held a monopoly on demand as there were no other large-scale consumers.
The power utility wants the government to declare coal a “strategic mineral” under the Minerals and Petroleum Resources Development Act (MPRDA) Amendment Bill.
This has sparked concern among some mining executives that the government could impose price controls on domestic coal sales or limit export volumes through physical quotas.
Further‚ they worry that export taxes might be introduced should coal be declared a strategic mineral.
But the Chamber of Mines recently downplayed the possibility of price controls and export taxes.
It has declared its support for the final draft of the MPRDA Amendment Bill.
Mining legal expert Peter Leon of law firm Webber Wentzel said the chamber had done a “commendable job” in tackling many of the problems with the bill.
But he was concerned about the power it granted the mineral resources minister “to restrict exports of designated minerals”.
Chamber of Mines president Mike Teke on Wednesday declined to comment because Shabangu had not yet signed off the Council for Geoscience’s review report.
Although not yet released‚ it is already proving controversial.
“This information is important and it needs to be made public‚” said one industry source.
Another authoritative coal sector source said the report probably overstated South Africa’s real position in respect of reserves and resources because it did not take commercial aspects into account sufficiently.
These aspects included coal quality and railage costs from the Waterberg to export ports or Eskom’s power stations in Mpumalanga.
Further‚ there was a need to develop infrastructure to supply more water to the Waterberg so that the region’s predominantly low-grade coal could be upgraded to a saleable product.
That was done through “washing” the coal in preparation plants to improve product quality.
The commercial factors could result in some coal reserves not being exploited as that could not be done profitably.
Significantly‚ the report does not comply with the South African code for the reporting of exploration results‚ mineral resources and mineral reserves (Samrec).
The code lays down the standards mining companies listed on stock exchanges must meet.
The authors of the Council for Geoscience report acknowledge the noncompliance with the code.
“As it was impossible for this report to comply to the Samrec‚ and by extension the South African National Standards 2011 code consistently‚ it was endeavoured to comply with this code whenever possible.
“The report was not prepared for driving potential investments but as a scientific report,” it said. — BDlive
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