Mining has long been integral to the development and advancement of South Africa’s economy and has contributed largely in making its economy the strongest on the continent.
Ownership, access and opportunity in regards to the country’s mineral resources are regulated by the Minerals and Petroleum Resources Development Act of 2002, which recognises the state’s custodianship over the country’s mineral resources. South Africa’s mining industry is the country’s largest employer, with around 460,000 employees and a further 400,000 employed by the suppliers of goods and services to the industry.
As the country’s second largest earner in terms of the value of total sales after gold, coal provides 6.1% of the country’s total merchandise exports. South Africa is the sixth largest holder of coal in the world with 31 billion tonnes of recoverable coal reserves, equivalent to 11 % of the world’s total coal reserves. Although most of the coal is consumed by the South African energy sector, with 77 % of the country’s primary energy needs provided by coal, circa 69 million tonnes of coal per annum are exported via Richard’s Bay Coal Terminal (RBCT). Historically the majority of this was exported to Europe, but Asia (India and China) has in recent years become the preferred market. The RBCT was upgraded in 2010 with a resultant increase of the export capacity to 91Mt/a.
Coal production in South Africa is concentrated in large mines, with 8 mines accounting for 61 % of the output. About 46.5 % of the country’s coal mining is underground and 53.5 % is produced from open-cast mining methods (SA Yearbook 2007 / 08). Bituminous or steam coal is South Africa’s main export coal, with anthracite having to be imported, due to dwindling reserves.
Similarly to the gold industry, the South African coal sector has undergone a number or mergers and acquisitions and name changes over the last few years. What has emerged is three major coal producers: BHP Billiton Energy Coal South Africa; Anglo American Coal and Xstrata. The fourth largest is Exxaro Resources Limited, South Africa’s largest black-controlled diversified mining company, whose entrance into the market was pre-empted by a merger of the Eyesizwe and Kumba’s coal base and industrial minerals divisions. Sasol, Total and Optimum are also major producers.
Universal Coal’s thermal coal projects are located in South Africa’s Mpumalanga province – a region traditionally rich in coal. For this reason it has attracted many large mining companies to establish mines in this area. 83 % of the total amount of coal produced in South Africa is mined in Mpumalanga. Coal is also mined in the provinces of Limpopo, Kwazulu-Natal and Free State and is concentrated around the towns of Lephalale, Witbank, Ermelo and Secunda.
Universal Coal’s coking coal projects are located in South Africa’s northern Limpopo province – a region that in recent years has attracted a major increase in exploration and the development of the Vele and proposed Makhado mines (owned by Coal of Africa Limited). The area has existing road and rail infrastructure providing access to export facilities along the east coast of Southern Africa.
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