MIKE TEKE: Coal miners embrace renewable energy and aim to decarbonise

Less than a decade ago it would have been a remarkable circumstance for coal producers to not only embrace renewable energy but seek opportunities to decarbonise their operations, construct renewable energy plants, and do so in collaboration with one another and their customers. Yet nowadays it is not only the right thing to do, but makes business sense.

This is just one of the remarkable ways in which the responsibility of business has changed in the few decades since I entered the world of mining. Back then, the primary responsibility of managers was seen to be to the interests of shareholders. Now, we are responsible to the world at large, most particularly in our industry. And it forces us to adopt business strategies that can best be described as counterintuitive.

There is nothing wrong with shareholders expecting a reasonable return on their investments. That cannot and will not change. But business nowadays recognises a far broader range of interests.

In SA, assisted by the growth of trade unionism from the 1980s and a realisation of the benefits to shareholders of a more skilled, better-paid and a stable workforce, employees became core to the way business was conducted.

Then came recognition of the importance of communities. For manufacturers and purveyors of consumer goods communities include customers in many cases. For operations such as mines, the communities are our neighbours and employees. Our responsibilities and our relationships run from ensuring we do no harm to supporting economic development, developing commercial partnerships and, with employee share ownership schemes, even ownership arrangements through community trusts.

Remarkable conundrum

But our responsibilities as business go beyond local stakeholders. All businesses should accept their obligations to limit as far as possible the impacts of the products they produce and sell. This might apply to the environmental and safety impacts of a motor vehicle to the safety of a food product.

For a company such as Seriti, as a coal-mining business we acknowledge that the product we produce is a fossil fuel, the use of which contributes to climate change. Let us not shy away from acknowledging that head on. This creates a remarkable conundrum for us as a coal-mining business. It means we must understand that we should not aspire to increase production of what is now our primary product, not because it would not improve our profits and the return on investment to shareholders. It would.

Related to this is that we accept that we will not be competing with our peers to find new deposits of our product. And we know that our market share will not be threatened primarily by other coal miners winning over our markets. Rather, the competition we face is from those who generate new forms of energy, including solar energy, wind energy and many more.

A further conundrum relates to the announcement made jointly with Eskom and Exxaro of the two coal producers’ intention to reduce our carbon footprint by at least 50% at our operations by reducing our dependence on Eskom’s coal-fired power, among other things. So that means we are acting to reduce demand for the very product we supply to Eskom.

New opportunities

Here we have an unprecedented memorandum of understanding where the two largest suppliers agree to co-operate with each other to reduce emissions, and then collaborate, too, with their customer. Not in any way to take advantage of market position, but to take better care of the planet. This is ironic.

Shareholders must appreciate that they are investing in and reaping benefits from a fossil fuel that negatively affects the environment and must adjust to the change that is happening and that will intensify. As well as changing the way we mine coal, our new subsidiary Seriti Green will enthusiastically be entering what will be, for us, new areas of power generation. Climate change is a threat to the world. However countering it, we believe, brings new opportunities too.

Employees must appreciate that as they work in coal mines they must look towards their reskilling and begin building their future into the new green world. Communities must be assisted to transition to new patterns of energy generation, new ways of work and new ways of receiving services, which include electricity. The challenge for coal-mining communities is particularly severe.  

But it must be done responsibly and justly. This is what Elon Musk said in 2014 and it holds true today: “If there was a button I could press to stop all hydrocarbon usage today, I would not press it. It would cause civilisation to come to a halt. It would be irresponsible to press that button.”

We would be foolish to press that button. But equally we need to be moving towards a lower carbon future. The challenge our country faces, with many other countries, is how rapidly to move. This is dependent on achieving what needs to be done to mitigate negative impacts on our already struggling economy broadly and, more locally, how to mitigate adverse impacts on employees, coal-mining communities, the coal producers themselves and the local and national suppliers of goods and services to those companies.

One can only hope that, with all else it must do, COP26 needs to pay proper attention to achieving a just transition, particularly in the developing world, which should not have to pay for the historical benefits of the developed world’s carbon emissions over these many decades. 

It is a huge task for which we all bear responsibility — government at all levels, businesses, and organised labour. We cannot suddenly press the button. But we cannot afford to dither either.

• Teke is CEO of Seriti Resources.