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Exxaro waiting for commercial viability before shifting to green energy amid pressure to reduce dependence on coal

Exxaro is waiting for green hydrogen technology to develop to the point that it becomes commercially available before diving into it, says Mzila Mthenjane, the company's executive head of stakeholder affairs. Picture: Oupa Mokoena/African News Agency (ANA)

Exxaro is waiting for green hydrogen technology to develop to the point that it becomes commercially available before diving into it, says Mzila Mthenjane, the company's executive head of stakeholder affairs. Picture: Oupa Mokoena/African News Agency (ANA)

Published Mar 22, 2022

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Coal producer Exxaro is waiting for green hydrogen technology to develop to the point that it becomes commercially available before diving into it, says Mzila Mthenjane, the company's executive head of stakeholder affairs.

Green hydrogen is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity.

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Mthenjane said while the gas technology was expensive, the company was not averse to it.

Mthenjane was speaking during a question and answer session at the company's flagship Grootgeluk mine in Lephalale, Limpopo. On Thursday the company unveiled how it had spent the R20bn it pledged in 2018 in response to President Cyril Ramaphosa's call to raise R1.2 trillion in investment.

"It's best we leave them (companies that are currently using the gas as fuel) and support them, until it is viable and available commercially, which presents a much lesser risk to us," he said.

Exxaro executive head of projects and technology Johan Meyer, said it's not as if the company was not looking at green hydrogen as such, but there were certain things to consider.

"We have to also look at scaling capabilities that we have. Hydrogen is expensive. Once there is a breakthrough to the technology, we will reap the first benefits from that," Meyer said.

Meyer reiterated Mthenjane's comments and said it was best to wait for the technology to be developed and have the correct infrastructure for it.

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"Five years ago people said we will have 50/50 electric cars in 2020. How many charging stations are there from here to Cape Town? Those are the practicalities that we have to think about in technology. It's not about owning an electric vehicle and you drive to Bloemfontein and you can't charge. You need to make sure that the infrastructure and the whole system are there. You need to time technology," he said.

Last year Exxaro Resources revealed that it was diversifying its portfolio to include renewable energy and minerals, with a focus on wind and solar power, bauxite, copper, and manganese in response to climate change.

While Exxaro is waiting for green hydrogen to be viable, Anglo America Platinum (Amplats) recently said the cost of renewables came at 50 percent less than what the company was currently paying for energy.

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Energy makes up between 20 and 25 percent of the cost in the Amplats business. The mining giant said it used green hydrogen instead of diesel to fuel its trucks.

Another mining industry player that has a climate strategy in place is Sasol. The company said it has plans to accelerate the decarbonisation of its business.

"We have also announced and are progressing several partnerships, to realise our ambitions. Our focus is to continue progressing the shift, to incremental natural gas as a transition feedstock for our SA value chain, as well as advancing sustainable aviation fuel, green hydrogen, and renewable energy opportunities," Sasol said.

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The company said it had ambitions to become a credible exporter of sustainable energy and chemical products, such as hydrogen, ammonia, and sustainable aviation fuel.

As the world fights the impact of climate change and the disruption of energy markets, green hydrogen is an important energy source in transitioning from fossil fuels to greener alternatives, and South Africa wants to position itself to take advantage of this.

Recently, President Cyril Ramaphosa announced that the government had plans that support the development of a pipeline of green hydrogen projects worth about R270 billion over the next decade.

While Africa is said to be contributing about 5 percent to global carbon dioxide (CO2)emissions, the African Development Bank (AfDB) suggests the cost of climate change on the continent could rise to $50bn each year by 2040, with a further 3 percent decline each year in GDP by 2050.

In 2020, South Africa generated 86 percent of its electricity from coal. At COP26, the country was allocated R131 billion ($8.5bn) by France, Germany, the UK, the US and EU to accelerate its transition from a high carbon economy.

Allen & Overy South Africa Partner Alessandra Pardini, said green hydrogen was important for the energy transition in South Africa.

"For example, large mining trucks could convert to hydrogen fuel cells, instead of diesel engines, with no carbon emissions," she said.

GE Gas Power sub-Saharan Africa chief commercial leader Nosizwe Dlengezele echoed Pardini and said the role of gas is seen as a transition fuel when people talk about decarbonisation and the energy transition.

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