Anglo says it’s holding on to SA coal mines – for now

Business

Anglo says it’s holding on to SA coal mines – for now

This is because it regards itself as a more responsible operator that can better facilitate a transition out of coal

Lisa Steyn


Anglo American will hold on to its remaining coal mines in SA, despite previous plans to sell off the coal business entirely.
Under the leadership of July Ndlovu, who was appointed Anglo’s Coal SA CEO in 2016, the company has sold all of its Eskom-tied coal mines. By selling assets in Australia too, Anglo American has halved its total thermal coal production since 2012.
Globally, large players are pulling away from coal as the world moves to transition to a low-carbon economy and anti-coal sentiment intensifies in society and among investors.
But the multinational mining company has no intention of selling its remaining export-focused coal operations in SA for now. This, Ndlovu says, is because Anglo American regards itself as a more responsible operator – one that can better facilitate an accountable transition out of coal.
However, in line with Anglo American’s sustainable mining plan – which includes a commitment to reduce greenhouse gas emissions by 30% by 2030 – there is no intention to acquire any additional thermal coal assets in SA or elsewhere.
The Coal SA assets have economic life beyond 2030 at current production levels of about 18 million tons a year, and will maintain these levels through various life-extension projects.
“Someone else would grow these assets,” Ndlovu said. He noted that while it is possible to double production at its Zibulo colliery in Mpumalanga, the company has no intention of doing so.While international coal prices were particularly strong in the final few months of 2018 and at the beginning of 2019, they have since tumbled dramatically. Market analysts say weak coal prices serve as a disincentive for coal miners to increase production.
But as global sentiment turns against coal, Ndlovu said it has become increasingly more difficult to convince Anglo American shareholders that investment should be made into coal rather than other commodities.
Although the world is clearly moving away from coal toward a low-carbon economy, the transition would not happen overnight, Ndlovu said, noting that a desperate need for electrification in the developing world remains.
“Thermal coal provides much-needed affordable energy to millions of people, particularly in the developing world, and will remain significant – notwithstanding its diminishing share of the energy mix in decades to come.”

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