Q&A with Thungela CEO July Ndlovu: Risk of unrest justifies state of disaster

July Ndlovu, CEO of coal miner and exporter Thungela Resources, sat down with Business Day’s Denene Erasmus at McCloskey’s Southern Africa Coal Conference in Cape Town to talk about the “permacrisis” in SA’s energy and transport sectors. Ndlovu, also the chair of the World Coal Association, believes the energy crisis in Europe might have caused long-term changes for coal export patterns from SA.

Market dynamics for SA coal changed in 2023 because of the sudden uptick in demand from Europe after the EU banned coal imports from Russia in response to its invasion of Ukraine. Coal exports to Europe through the Richards Bay Coal Terminal increased sixfold to 14.3-million tonnes from 2.3-million tonnes in 2021. Do you think these changes are here to stay?

In the short term there is no question that Europe will import more coal from SA to replace Russian coal, but in the longer term the main driver will be the desire to diversify energy sources. This means that even if the war in Ukraine is resolved, and Europe can find an accommodation with Russia, I don’t think we will again see the same concentration of reliance [from Europe] on Russia that we saw in the past. This, I think, will secure a pathway for SA coal to Europe, for as long as Europe is burning coal.

Despite its global commitments to reduce emissions and to a just energy transition, the government insists that SA will not abandon coal in its energy mix anytime soon. This seems obvious given that new power stations such as Medupi and Kusile will need coal for the next 40 years to run. However, do you think any new coal-fired capacity will be added in the country?

SA is behind the curve in terms of the need for power. I think these new power stations [Kusile and Medupi] will continue to provide baseload and on top of that we are probably going to see microgrids begin to emerge that will be built on the back of renewables — purely out of necessity.

Will SA build another coal power station? I doubt it. I see the pathway for gas to be more certain than for coal. The reason for that is our onerous environmental requirements that make building a power station in SA much more difficult.

This is also I think the only advantage of declaring a state of emergency over the energy crisis — because it will enable the government to relax some of these regulations that are preventing us from deploying new generation capacity as quickly as we could.

So you support the calls for President Cyril Ramaphosa to declare a state of disaster over the energy crisis?

Yes, for no other reason than that it will cut through the red tape that is delaying the deployment of additional generation capacity. Eskom desperately needs additional capacity to close the supply gap and we can’t afford the red tape that is stopping us from doing that.

Even if it means clearing the way for the government’s controversial plans to procure emergency generation capacity from Turkish company Karpowership?

It doesn’t matter where the additional generation capacity comes from. We have an emergency that requires urgent action. We are a country that loves protesting — and violently so. By not acting quickly enough to solve the energy crisis we are creating a perfect mix for a social uprising. If bringing in powerships allows us to transition to a secure, reliable, affordable power supply then it is an option we should seriously consider.

Troubles such as cable theft and the availability of locomotives at Transnet Freight Rail, especially on its coal line, have seen coal exports through the Richards Bay Coal Terminal drop to about 50-million tonnes in 2022, from 70-million tonnes in 2020 and the worst performance since 1993. Do you think the security interventions being implemented by the industry in partnership with Transnet can win the fight against cable theft and help turn the situation around to increase exports through the port this year?

I’m the ultimate optimist. And my optimism doesn’t come from the fact that everything is right; it comes from the realisation that we can’t afford not to do something. I think that the efforts of our collaboration with Transnet are starting to show results. It’s early days, but at least we are starting to prioritise the actions that we need to implement. I’m encouraged that, if we continue in that spirit, we’ll definitely start seeing some progress this year.

Given the immediate crises SA faces in energy supply and transport logistics, what are the other important issues in the mining sector that may be falling off the radar?

I think there are some real, big challenges that don’t look urgent now, but that will become a big issue for this country five or 10 years from now.

We have taken our eyes off the ball because we are in a crisis. We are not getting as much investment into mining as we could. I worry that we are not doing enough as SA to build new mines to take advantage of the opportunities that might come from the rise in demand for green metals.

Our discussions are bogged down in politics, in the crisis of Transnet, the crisis of Eskom, and the crisis of crime — to the detriment of actually thinking about what we have to do to take advantage of the opportunities we get that can grow our economy and create jobs.

erasmusd@businesslive.co.za