Picture: iSTOCK
Picture: iSTOCK

Business Day should be heralded for broaching the important topic of the future of coal mining (Anglo Plots SA Coal Exit and Warns on Latest Mining Charter, July 29).

The article showed that international investors expect mining companies to reduce assets and exposure to risks from coal mine ownership.

However, it fell short in not analysing the risk for domestic investors in taking over coal-mine portfolios. Domestic futures for coal might not be as robust as suggested, and SA investors should think twice before exposing themselves to the risks international companies are ridding themselves of.

First, the article mistakenly suggested there is a lack of viable alternatives to coal as a source of energy in SA. In fact, research at UCT, by the CSIR, by Meridian Economics and in the draft IRP 2018, shows that renewable energy can be developed cheaply and at a massive scale within a few years in SA. The same Business Day edition confirmed that renewable energy has been cheaper than coal in recent independent power production (IPP) bids (Public Protector to Probe IPP Deals, July 29).

Second, SA coal miners should also not rely on continued demand for exports by India and China. Research by CPI shows that this is likely to fall earlier than the SA domestic market. India’s renewables-build accelerates and the country increasingly prioritises Indian rather than imported coal. China, on the other hand, does not even import SA coal anymore. The decline of higher margin exports could put much of SA’s coal industry under serious financial pressure.

As a result SA mining companies that see short-term value in coal mines expose themselves to high financial risks, which might ultimately be borne by the people of SA. Should we not learn from the fallout around empowerment deals made on the back of exhausted gold mines?

Prof Harro von Blottnitz
Energy Systems research group, UCT

Jules Schers
Expertise France, UCT visiting researcher

Matthew Huxham
Climate Policy Initiative, London