CAPE TOWN - South Africa’s coal mining junior companies are mulling the establishment of a lobby group to promote their interests as sources of funding dry up amid the global anti-coal sentiment and Eskom’s operational and financial woes.
IHS Markit 15th Annual Coal Conference held in Cape Town last week, which brought together 300 domestic and international suppliers and buyers of the fossil fuel, heard how junior coal miners feared a bleak future as sources of funding were few and far between.
Xolile Mdolo, chief executive of Zomhlaba Resources, told delegates on Friday that it was difficult to find money to fund coal projects.
“Conventional banking systems in this country do not afford us space and probably the opportunity to invest with us. We have no cushion, making it difficult to create jobs and ensure opportunities for our host communities,” said Mdolo.
Mdolo said development funders, including the Industrial Development Corporation at times provided funds, however, the long-time frames to access the funding often threatened the viability of projects.
“It (funding) takes a long time. The money does not lead to opportunities, especially for junior miners.”
Mdolo said a lobby group should be established in the interest of the junior mining companies.
“At least now some of the junior guys will start to come together in a progressive way of engaging that will be regulative and short of a being saying we are colluding as there is also that sensitivity,” he said.
Anti-coal sentiment has seen BlackRock, the world’s biggest asset manager telling the World Economic Forum last week that it supported a shift in finance as it reiterated its commitment to climate change.
Randy Fabi, a senior energy reporter at IHS Markit, said on Friday that big international banks were turning their backs to the fossil fuel as they wanted to be more green.
“The option for funding is few and far between. There are still investors who want to make money from coal, especially in the east where they are building coal plants. There is still going to be a demand for coal in certain regions,” said Fabi.
Last October, Mineral Resources Minister Gwede Mantashe unveiled the Integrated Resource Development Plan, the blueprint for electricity generation up until 2030.
By 2030, almost 60percent of South Africa’s electricity will still be generated from coal, down from the current 77percent.
Fabi said there were challenges facing the coal industry, but President Cyril Ramaphosa had said coal would be a part of the energy mix in South Africa for the foreseeable future.
“I think that the coal industry will still thrive for the next decade. After that the question will remain whether it will be phased out,” Fabi said.