Mining and Energy Minister Gwede Mantashe says the Mpumalanga towns of Ermelo, Middleburg, Witbank, Hendrina and those within range of the coal-fired power stations would perish if the power stations were to be switched off.
Addressing investors at the Limpopo Provincial Mining, Energy & Industrialisation 2022 Investment Conference on Thursday morning, Mantashe told delegates that coal will remain part of the South African energy mix for years to come, and the Integrated Resource Plan (IRP) remains a commitment to mixed energy solutions.
Turning to energy Mantashe stated that the current crisis could be resolved by investing more skills into the running of the power stations. “In our visit to the power stations, we noted that the average power station managers only have two years’ experience”.
The Minister lamented that the Musina-Makhado Special Economic Zone appears to have abandoned their investment in coal-fired power stations in favour of renewables.
“Limpopo has vast energy potential. That is disappointing. If you had come to me, I would have reminded you that renewables have no baseload; and (renewables) require a baseload energy from coal to remain sustainable”.
Mantashe stated that the Russia-Ukraine crisis has been a boon to South African coal, with export increased 8-fold compared to the period before the Russian invasion led to Europe’s energy crisis.
On Wednesday Bloomberg reported that Thungela Resources Ltd., built from Anglo American disposed assets, has soared more than 1,300% since the South African coal miner was carved out of Anglo American Plc last year. But despite this scorching rally, investors value the stock at a discount to worldwide peers, whose reserves of the fuel may last longer.
Thungela’s shares trade at about 1.8 times the company’s 12-month estimated earnings, compared with 7.4 times for stocks in the MSCI World Metals and Mining Index.
A European energy supply crunch worsened by Russia’s invasion of Ukraine has propelled coal prices to record highs this year, helping to make Thungela the best performer on Johannesburg’s stock market.
Thungela remains “far too cheap,” even with its relatively short-life assets, said Ben Davis, a mining analyst at Liberum Capital Ltd. in London who has a buy rating on the stock told Bloomberg. “Given the upside risks to energy prices over the winter period, we believe having coal and gas exposure in the portfolio is essential.”
On Wednesday a community in the Sekhukhune District in Limpopo called on the government to intervene as mining companies continued to reap billions and leave impoverished areas behind. Residents at Atok where the Bokone Platinum mine was closed in 2017, want the mine to be reopened. Provincial spokesman Ndavhe Ramakuela was reported by the SABC as confirming that the matter of Atok where the Bokone Platinum mine was closed in 2017, would be raised at the two-day mining conference in Polokwane.
Mantashe called on the Limpopo Economic Develop Agency to accelerate engagement with investors on the mining and energy potential in the province.
