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Title

COAL TRANSPORT AFRICA CONFERENCE 2015, INDABA HOTEL, JOHANNESBURG

Logistics in the Context of Small-Scale Mining

Presented by: Mr. PG Kwata

Director: Small-Scale Mining

Department of Mineral Resources,

SOUTH AFRICA

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The World's Biggest Environmental Killer: Indoor Air Pollution More than one third of the world’s population – 2.9 billion people – still burns wood, charcoal and dung indoors to keep warm and cook food. The World Health Organization (WHO) estimates that 4.3 million people in 2012 lost their lives due to indoor air pollution. Estimates from the WHO and others suggest that between 30 and 150 times more people are killed due to indoor air pollution than global warming. Yet, the latter dominates the headlines. In the 20th century alone, 260 million people were killed by indoor air pollution, which is more than the losses of the century’s many wars. The good news is that we’re seeing quite some improvements on air pollution. Whereas in 1900 the total cost of this problem was as high as 23% of global GDP, today it is around 6% and we believe this number will fall to 4% in 2050.

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Indoor (Township) Air Pollution in South Africa – The Low-smoke Fuels Programme (Taken from the speech delivered by the DME Minister at Coaltrans CT, 2002)

My Department has embarked on launching the National Low-smoke Fuels Programme with the objective of reducing the unacceptable levels of air pollution in households. An integral part of this Programme is to replace the normal household coal with low-smoke fuels. The main result of a unique large-scale experiment in the Township of Qalabotjha to evaluate the efficacy of low-smoke fuels indicated that low-smoke fuels have the potential to reduce the level of particulate pollution by approximately 56% when compared to normal coal. Although low-smoke fuels will not be successful in lowering air pollution to acceptable levels on its own, they have a significant role to play in an integrated approach involving continued electrification, appliance replacement or maintenance, housing insulation and other measures. These options to reduce the air pollution in households will form the basis of a strategy that will be developed in close co-operation with the relevant stakeholders and the desires of the end users of coal. Finally it is planned to have a national awareness campaign to convey the solutions to the end users so that they can choose their own desired measure or combination of measures to reduce air pollution. The Government is committed to find a solution to this problem.

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Indoor (Township) Air Pollution in South Africa (Taken from the speech delivered by the DME Minister at The Sustainable Development Conference, 2002) It is estimated that there are approximately one million households in South Africa that are still dependent on coal. These one million households consume, on average, one million tons of coal per year. Coal combustion in these poor households leads to unacceptably high levels of indoor and outdoor air pollution. The negative health effects on these coal users, which results from extended pollution exposures, are generally long lasting and, in some cases, life threatening. Furthermore, this ill-heath burden is primarily carried by those who can least afford it. Since there is no real financial incentive for the business sector to implement technological solutions to eliminate the wide-scale harmful effects of burning coal in the domestic sector the responsibility of taking on the mantle to champion a healthier environment for this sector has been taken on by the South African Government. We need to acknowledge those who, nevertheless, have been trying to address the problem and I understand that there have been small pockets of progress and success. During the 1990’s my department initiated the Low-smoke Fuels Programme. The aim of this Programme was to specifically replace the use of coal in households. However, after continued investigations it became clear that an integrated approach would be necessary to eliminate the harmful effects of burning coal in households. Consequently the Low-smoke Fuels Programme was renamed as the National Integrated Clean Household Energy Programme. One of the projects undertaken in this integrated programme related to estimating the cost to society and the cost to the state of burning coal in households. Attempting to distil information and data from a number of studies into a few highlights is not easy. On looking at the programme for today I am pleased to see that time has been set aside to expand on the issue of the impact of coal pollution on people’s health in more detail. Aside from the obvious health cost associated from the medical treatment of respiratory problems additional costs are associated on the economy with increased sick-day leave and on education with increased absenteeism. Broader environmental impacts like decreased visibility, leading to an increase in crime and consequently a concern on safety, also result from these emissions. Although one million tons or less than 2% of South Africa’s total coal consumption is used in households, this amount of coal contributes approximately 36.5% of total national particulate

emissions.

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OUTLINE OF PRESENTATION

1. SIGNIFICANCE OF SSM

2. VISION

3. AFRICAN MINING VISION

4. CLASSIFICATION OF SSM

5. CHALLENGES/CHARACTERISTICS

6. KEY ACTIVITIES OF THE SSM DIRECTORATE

7. COAL IN SOUTH AFRICA

8. COAL INFRASTRUCTURE I. PORTS

II. RAIL

9. COAL MARKET

10. WAY FORWARD

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Significance of Small-Scale Mining?

• Improved spatial distribution of economic activity

• Rural/Local employment

• Establishment of small local industries

• Mainstreaming of HDSAs into the formal economy

• Skills transfer to local communities

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Vision?

Small-Scale Mining activities are viable,

sustainable economic projects capable

of making a meaningful contribution to

decent employment creation, poverty

alleviation and increased economic

activity.

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AFRICAN MINING VISION?

• Developing a sustainable artisanal and small-scale mining sector;

• A mining sector that harness the potential of artisanal and small-scale mining to stimulate local/national entrepreneurship, improve livelihoods and advance integrated rural social and economic development;

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AFRICAN MINING VISION (Continued)

• It provides between 13 and 20 million jobs worldwide and a further 80 – 100million people depend on it for their livelihood

• In Africa, about 3.7million are directly engaged in this sub-sector, with 30million people depending on it and this number is expected to triple by 2020

• more labour-intensive than large-scale mining

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Classification of Small-Scale Mining?

• Classification based on: National Small Business Amendment Act, 2003 (Act 26 of 2003)

Category Micro Very Small Small Medium

No. of employees

<5 <20 <50 <200

Assets <R100,000 <R2m <R6m <R23m

Annual Revenue

<R200,000 <R4m <R10m <R39m

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Small-Scale Mining

Challenges/ Characteristics

Access to Finance, R&D,

and technology

Skills

Environmentally unsustainable

Illegal

Poor Working Conditions

Access to Markets

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Finance •Partnership with other departments to facilitate access to finance

• Partnership with other financial institutions

Tools/Technology •Education and engagement with small-scale miners

•Promotion of sustainable extraction and processing technologies in partnership with Mintek and other scientific institutions

•Support in provision of equipment

R&D •Work with state agencies and academia to promote investment in R&D for small scale mining

•Work with CGS to increase focus on rural and periurban areas as well as poverty nodes

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Skills

Compliance

Environmental Sustainability

• Work with MQA to profile skills needs and gaps

• Identify and address specific skills needs of operations supported

• Continuous M&E and engagement with communities to reduce non-compliance in partnership with DMR Mining Regulation

• Assistance with application process

• Assistance with the drafting of environmental management plans

• Assistance with financial provision

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Key Activities of the DMR SSM K

2. Promoting regulatory compliance in small

scale mining operations. ‘Legalizing’ small

scale operations

–Assisting in the application process

–Constant M&E to ensure compliance to

regulatory framework especially

environmental and health and safety

3. Providing technical support to small scale

miners

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Proactive Promotion

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• Partnership with the CGS to identify

small scale deposits with priority given

to rural areas as well as communities

within poverty nodes.

• Work with COGTA to develop

community led enterprises and

integrate into spatial and local

economic development plans.

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IEA Major coal producers 2013 (Mt)

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2010 2011 2012

PR of China 3 140.2 3 418.8 3 549.1

United States 996.1 1 005.9 934.9

India 570.4 582.3 595.0

Indonesia 325.0 360.3 442.8

Australia 424.4 402.2 420.7

Russian Federation 321.7 321.7 353.9

South Africa 254.5 252.8 259.3

Germany 182.3 188.6 197.0

Poland 133.2 139.3 144.1

Kazakhstan 110.9 116.5 126.0

Colombia 74.4 85.8 89.5

Ukraine 57.7 69.7 71.6

Turkey 73.4 76.1 69.5

Canada 67.9 67.1 66.6

Greece 56.5 58.7 61.8

Czech Republic 55.2 57.9 55.0

Other 366.1 404.1 393.9

World 7 209.9 7607.6 7 830.8

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SA Coal Reserves by Coalfield

29%

25% 21%

13%

5%

2.2%

1.7% 1.6% 0.8% 0.4%

0.3%

0.01%

HIGHVELD WITBANK WATERBERG * ERMELO

VRG.-SASOLBURG SOUTH RAND UTRECHT KLIPRIVIER

SOUTPANSBERG KANGWANE VRYHEID NONGOMA

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Coal Production by Company

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Coal Production Small-Scale 2014 (55 mines)

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Coal Production by Size 2013

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Coal Production

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RBCT Exports by Region 2014

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Infrastructure: Ports

nario?

• Richards Bay Coal Terminal (RBCT)

• Maputo port (TCM)

• Navitrade (Richards Bay)

• Transnet Port Terminal in Richards Bay

• Bulk Connections (BC) in Durban.

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The World’s largest

Coal Export Terminal,

RICHARDS BAY COAL TERMINAL (RBCT)

• RBCT exports more than 70Mtpa

• Exports to 48 countries, in 6 continents

• Capacity for 91Mtpa, to be expanded to 110Mtpa

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Springbok Flats Coal Fields

Infrastructure: Rail New Transnet Projects

Waterberg Feeder

Coal Backbone System

Coal Export Line

Swazi Link System Lephalale

Musina

Lothair

Maputo

Komatipoort

Ermelo

Ogies

Pyramid

Broodsnyersplaas

Richards Bay

CFM

New Line > 30mtpa

Waterberg < 30mtpa

Limpopo Coal Fields

Waterberg Coal Fields

Mpumalanga Coal Fields

200 wagon

26t/axle 25 kV AC 100 wagon

20t/axle Diesel

100 wagon

20t/axle Diesel

Thabazimbi

100 wagon

20t/axle 25 kV AC

50 wagon

20t/axle 3 kV DC

100 wagon

20t/axle 3 kV DC

Future Link

200 wagon

26t/axle 25 kV AC Turf

Tunnel

Horse

shoe

South Africa Domestic Demand

• South Africa produces 2000-2500 TW-h of Electricity

per annum.

• 90% of all electricity generated by our Power Producer

Eskom is from coal-fired power stations.

• Eskom uses between 120 and 130 tons of Steam Coal

per annum.

• South Africa sells approximately 2-300 Tw-H into

Africa.

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COAL TO LIQUIDS (CTL)

ANOTHER USAGE FOR COAL

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WAY FORWARD

• Building blocks necessary to promote Small-Scale Mining need to be assembled by

a competent planning and organizing body

• For South African Small-Scale Coal Industry to develop, this body needs to be created

• Will ensure proper training and support for the operator to begin the required effective Exploration, Building and Operating of the profitable mine, which will build investor confidence and drive investment to generate the start up capital required

• Adequate Business case needs to be established up front to assess the world project demand for coal (local and International demand by grade / quantity, whether South Africa might have coal reserves that can be mined, stored and transported efficiently to meet that demand profitably and whether the and economic climate of the Nation is conducive to the development of the South African coal mining industry

• This body needs to have a strategy to find, include and develop small-scale mining operations

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THANK YOU

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