‘SA coal producers will struggle to meet demand’

South African coal producers will struggle to meet demand over the next few years despite coal production that is likely to be on an upward trend from 2011. With South Africa’s coal production having been stagnant at approximately 240 million tonnes per annum for the greater part of the past decade, expectations are that coal production will increase marginally in the coming months, says Frost & Sullivan metals and mining analyst Wonder Nyanjowa. This is because there are no major projects at present transitioning the country to full production. “The electricity crisis in South Africa highlighted the need to not only expand power generation capacity, but also to ensure adequate supplies of coal to power generating plants. Coal production must grow to cope with the anticipated increase in demand for coal from the power generation and synthetic fuels manufacturing industries.” Analysis from Frost & Sullivan, published in September 2010, indicated that South Africa’s coal production was likely to increase to 300 million tonnes by 2015, as coal mining companies expanded to meet the anticipated increase in demand for coal from companies such as Eskom and Sasol. “The construction of two new power stations by Eskom, the de-mothballing of three others, and the construction of an extra synthetic fuel manufacturing plant will result in the domestic demand for coal stepping up by an additional 75 million tonnes in the next five to ten years,” says Nyanjowa. But South Africa’s coal mining industry remains unbalanced, with rising coal demand on one hand and constrained supply sources on the other. Limited port and rail facilities continue to slow the growth of the country’s coal exports. With the global demand for coal expected to increase by 4% per annum, the lack of infrastructure may prevent the country from coping with the upsurge in demand.