The decision by Exxaro Resources to no longer invest in thermal coal assets is indicative of what the coal sector can expect in the future.The coal industry is currently still the biggest in the mining sector in South Africa, accounting for more than 24% in terms of production volumes (weighted). The industry has, however, seen very little investment in the form of greenfield projects in recent years.This comes as the negative global sentiments surrounding coal continue to grow as consumers demand cleaner energy production.According to Exxaro Resources CEO Mxolisi Mgojo, the decision to no longer invest in thermal coal assets is directly linked to the company’s strategy to become carbon-neutral by 2050.Speaking during a recent online webinar, Mgojo said the company was still contractually bound to supply Eskom’s Medupi and Matimba power stations and would continue in the coalfield as long as these remained.But, he indicated, no further investment into new thermal coal assets would take place. Asked if the existing asset base would be sold off to other companies, Mgojo said there was concern for this approach.“Disposing one’s coal assets to another company has its own challenges,” he said, indicating there was a real risk involved as not all companies would act responsibly in terms of how they treated the environment. “At this stage our intent is to hold our current assets until they come to the end of life. No further investment will be made into other reserves.”It was a sentiment echoed by Mark Cutifani, chief executive of the Anglo American Group, who said while coal was a relatively small part of their business – making up less than 5% – it was intent on building a portfolio fit for the future and that did not include the likes of coal.Speaking during the same webinar, he said Anglo had opted to release all of its South African thermal coal assets to new owners.“The reality is that South Africa still requires a considerable amount of coal to keep people safe and to run the economy. With that in mind we will be transitioning our ownership into responsible hands as most of the assets still have ten years or more of life.”Anglo, however, could no longer see the benefit of its involvement in coal. “We can make a far bigger contribution by putting our capital into other commodities and products,” said Cutifani.Rio Tinto CEO of energy and minerals, Bold Bataar, said the company had also taken the decision to exit the coal business. “Coal prices are challenging, not to mention carbon penalties. Coal simply does not give good value – hence the decision to exit.”Anglo will be releasing all of its South African thermal coal assets to new owners.– Mark Cutifani
