MIKE TEKE: Seriti began as a coal company but is no longer one
Contrary to a rash assertion, coal companies are not in denial about climate change
US tech billionaire and philanthropist Bill Gates reflected some time back that headlines can be misleading, because bad news makes a good headline while gradual improvement generally does not. Sometimes superficial comments get airtime, whereas more considered thinking on complex and intractable issues often do not.
Recently, the somewhat rash assertion made by the new executive director of an important government structure, the Presidential Climate Commission, that coal companies are in denial about the transition to a more environmentally friendly energy mix, made headlines in a number of publications.
I was also a speaker at the conference where this occurred. It was a particularly short comment that did not in any way represent the discussion. Moreover, it did not reflect the ways in which major SA coal companies are doing a great deal of creative thinking about how to approach our responsibilities to mitigate the effects of carbon emissions on climate change.
It is a fact that the company I serve, Seriti, is a major coal producer. We are responsible for a portion of Eskom’s coal supply, and in this way play our part in keeping SA’s lights on. About 16,000 employees and contractors earn their livelihoods from carrying out this work. And we contribute in various ways to improving the quality of life of members of the communities surrounding our operations.
However, we are highly aware of the climate change realities that are changing the nature of the energy mixes of countries around the world. While the Russian invasion of Ukraine and the responses of Ukraine’s allies have had a severe impact, increasing the demand for coal in particular as the supply of gas is reduced, this is surely a temporary phenomenon.
The world will, and should, continue reducing the use of carbon-based power. And the world’s coal producers, for the good of the planet and their own shareholders, must be thinking about how they will acclimatise to the declining use of their primary products.
In our case, thinking has translated into a couple of actions that we’d be happy to discuss with the Presidential Climate Commission. First, in line with the establishment of our subsidiary, Seriti Green, last October, Seriti, Exxaro and Eskom signed a memorandum of understanding committing the parties to pursue the development of renewable energy projects to lower their carbon footprint at their operations.
By implementing renewable energy solutions at their Eskom-tied operations and at related Eskom sites, Seriti and Exxaro aim to achieve both carbon reduction and cost savings in the generation and use of electricity at these mines. Seriti’s stated goal is to reduce the company’s carbon footprint by about 50%. In our efforts to carry out a just transition, the three parties to the memorandum of understanding have also committed to creating employment and reskilling opportunities for surrounding communities.
Our second initiative, announced this week, is the R892m acquisition of Windlab Africa, which has a programme of six wind and four solar energy projects in Mpumalanga and the Northern Cape that will bring a planned 2,600MW onto the grid between 2023 and 2027. Two additional projects, one in each of the provinces, are already operating at a total level of 228MW. Windlab Africa also has projects in Tanzania, Kenya and Mozambique.
Seriti began life as a coal company. Seriti is no longer a coal company. We are a diversified energy company. We remain a company much of whose operational activities involve mining coal, which will remain the basis of SA’s energy baseload for some time to come. And for as long as there is value in our coal export operations they will continue.
I don’t pretend to know how many decades coal will still be in use, or the rate at which the decrease in coal-fired power will fall. Whatever the case we will be ready to be nimble, adapting to the circumstances that arise fully conscious of the need to shift over time to wind, solar and other forms of renewable energy.
But we will continue responsibly to provide coal and other forms of energy to Eskom according to the binding contracts by which we operate. And where it becomes appropriate we could envisage other markets for our products.
As we follow this road we are conscious of the impact the shift from coal will have on communities in the traditional coal mining areas. Making the transition just for them will be an immense task that will need conscientious application by all stakeholders, predominantly the Presidential Climate Commission. I hope its leadership is ready to engage in constructive conversations. We certainly are.
• Teke is CEO of Seriti Resources.