African governments are at the coalface of trying to raise the standards of living of their people. There is no single solution to ending poverty. However, sustainable utilisation of Africa’s natural resources is one way in which to contribute to better living standards and quality of life. Coal, which has major uses including and beyond thermal electricity production, and the steel and cement,⁽²⁾ are of those natural resources available in Africa. This is particularly so in Sub-Saharan Africa, where economic development depends on energy consumption.⁽³⁾

The demand for coal increased in the Western world during the Industrial Revolution of the eighteenth and nineteenth centuries, but coal was overtaken by oil as a primary source of energy in the 1960s.⁽⁴⁾ However, coal is now a fuel that is difficult to brush aside as it contributes to 39% of the world’s electricity production and is expected to remain so over the next 20 years, while it is also an important component of 64% of world steel production.⁽⁵⁾ Nevertheless, coal has detrimental environmental effects, such as air pollution and acid rain, which have been felt since the peak of the Industrial Revolution. The question then arises: should Africa continue using coal for much needed development despite its negative environmental consequences? This CAI paper discusses the dilemma that coal poses for development on the continent. This dilemma is premised on the idea that part of the African continent has sizeable coal resources that can be used in various ways to drive development on the continent.

Africa’s coal reserves and production levels

There is a lack of data relating to the amount of coal reserves located in Africa but a few country cases point to the abundance of the commodity on the continent. For example, South Africa possesses 11% of the world’s coal reserves and contributes about 6% to global production.⁽⁶⁾ The country has economically recoverable coal reserves of between 15 and 55 billion tonnes, of which 96% of reserves are bituminous coal.⁽⁷⁾ South Africa relies on coal for 92% of its electricity production.⁽⁸⁾

Zimbabwe has mineable coal reserves of between 10 and 20 billion tonnes.⁽⁹⁾ Nigeria too has vast unexploited coal resources. Consequently, the government has placed a high priority on resuscitating the coal mining industry in order to increase the country’s power generating capacity.⁽¹⁰⁾ Botswana and Mozambique are also set to become huge players in the coal industry in Africa.⁽¹¹⁾

As of 2008, coal production in Africa was projected to increase at an average of 3% up to 2011, buoyed by increasing demand from Asia.⁽¹²⁾ The steep rise in oil prices drove the increased use of coal.⁽¹³⁾ As stated by Abdul Kamara, a manager at the African Development Bank, “[c]oal has recently come back into fashion due to three advantages over oil and gas: lower prices per energy unit, higher reserves-to-production ratio, and a different geopolitical distribution of reserves.”⁽¹⁴⁾ Mozambique, which has extensive coal reserves, is set to become the second largest producer of the commodity after South Africa when the country eventually completes its US$ 30 billion projected expenditure on coal and power projects.⁽¹⁵⁾ Botswana has also increased production of coal by the expansion of its Morupule Colliery in 2008 and the beginning of production of coal at the Mmamabula East project in 2011.⁽¹⁶⁾

However, peak coal is a factor that needs to be considered in any discussion on the reliance on coal for development. Different projections of peak coal production in Africa have been produced, as indicated in the graph below, based on the ultimate recoverable resource (URR). Studies in South Africa for instance, indicate that peak production of coal has already been achieved, or it will be reached in the immediate future.⁽¹⁷⁾

Annual production of African coal (i.e. production by South Africa, Botswana and Zimbabwe) [Fig 1] ⁽¹⁸⁾

The deleterious effects of coal

Coal is primarily used in energy production. The coal energy production system involves coal mining, processing and energy generation; and each stage gives rise to environmental issues.⁽¹⁹⁾ For example, the coal mining stage gives rise to environmental challenges such as “coal mine accidents, land subsidence, damage to the water environment, mining waste disposal, and air pollution.”⁽²⁰⁾ The major detrimental environmental effect of the use of coal is that of air pollution. Jacklyn Cock of the University of the Witwatersrand writes ironically that “we think of electricity as a switch in the wall, ignoring the coal-burning power stations that generate the carbon dioxide emissions that contribute to the devastating process of global warming.”⁽²¹⁾ The mining, transportation and combustion of coal all have several health and environmental threats.⁽²²⁾

Acid mine drainage is another serious environmental problem resulting from coal mining.⁽²³⁾ The mining process breaks the rock mass, such that there is free flow of water and occurrence of acid-producing reactions between iron sulphide, which is present in coal, and oxygen-laden water.⁽²⁴⁾ Acidic water has the effect of dissolving aluminium and heavy metals, including iron and manganese, whose resultant chemical compounds are toxic to animal and plant life.⁽²⁵⁾ This can result in the loss of biodiversity, reduced agricultural production, soil erosion and water pollution, the latter of which is the case in South Africa’s Olifants River – the pollution from which is now spreading to the Vaal River catchment.⁽²⁶⁾

Greenpeace, a leading non-governmental environmental organisation, has warned that coal-based power generation will cause a water crisis in South Africa,⁽²⁷⁾ compounded by the fact that it is already a water-scarce country. Greenpeace charges that even if the national electricity utility in South Africa projects that its new dry-cooled power plants will use a tenth of water used by conventional wet-cooled power plants, the Kusile power plant will use 173% of water per unit of electricity when compared to wind power.⁽²⁸⁾

The effect of coal-based power generation on water use [Fig 2] ⁽²⁹⁾

The case of South Africa

Coal has been a dominant driver of economic development in South Africa for two centuries, starting with its use in the diamond mines in Kimberley in the late 1700s, followed by its use in the gold sector in the early 1800s.⁽³⁰⁾ And it appears that South Africa is not yet ready to give up on this commodity to meet its increasing energy demands. Coal in South Africa has become important in the same manner that oil is to an oil producing and exporting country.⁽³¹⁾ Eskom, the state-owned electricity enterprise, has a long term US$ 50 billion power plan to supply electricity not only to South Africa, but also to extractive industries in client states such as Mozambique, Botswana, Lesotho, Namibia, Swaziland and Zimbabwe.⁽³²⁾

Eskom generates approximately 95% of South Africa’s electricity, and an equivalent of about 45% of the African continent’s electricity consumption.⁽³³⁾ In 2007, the company gave major contracts to Hitachi and Alstom (private companies) for the construction of two coal-fired electrical power plants -Medupi and Kusile - each with a generational capacity of about 4,800 megawatts.⁽³⁴⁾ South Africa obtained a controversial US$ 3.75 billion loan from the World Bank ⁽³⁵⁾ for the construction of the Medupi power station. The approval of the loan was considered controversial due to the World Bank’s support of a project that will increase greenhouse gas emissions, which is not compatible with the bank’s commitment to climate change mitigation and adaptation.⁽³⁶⁾ The two power stations are still under construction.  These are mega projects expected to cumulatively contribute about 25% of South Africa’s power generation capacity.⁽³⁷⁾ South Africa, in its ‘addiction to coal’, is not only building Medupi and Kusile power stations, but the government is mooting a third new coal-fired power station.⁽³⁸⁾ These new power stations will increase carbon dioxide emissions. For example, it is estimated that the Medupi power plant will generate more carbon dioxide than 115 developing countries, that is, 25 million tonnes each year.⁽³⁹⁾

Other uses for coal include using it as an oil substitute. Coal liquefaction is a process of converting coal into liquid fuel that can be used as an alternative to oil.⁽⁴⁰⁾ South Africa has used coal liquefaction since 1955 and currently satisfies 30% of its gasoline and diesel needs from its indigenous coal resources.⁽⁴¹⁾ Sasol, a South African enterprise, produces about 160,000 barrels per day of petroleum and consumes around 44 million tonnes of coal per annum which has high ash (35%) content and low calorific value (less than 5,000 kcal/kg).⁽⁴²⁾ This is crucial to hedge against international crude oil price volatility for a country that relies on imported petroleum. However, coal liquefaction results in more carbon dioxide emissions than conventional oil refining.⁽⁴³⁾

Is coal really a necessary evil in Africa?

There are cases on the continent where, despite the known detrimental effects of coal to the environment, there is a continuation of commissioned projects that will increase the demand and use of coal. The South African power station projects highlighted earlier are an illustration of this point. Meanwhile, Zimbabwe is building a 2,400-megawatt coal-fired power plant whose first unit of 600 megawatts will be completed by 2014.⁽⁴⁴⁾ Zimbabwe has suffered from chronic power shortages and new power production is desperately needed.⁽⁴⁵⁾ There is no surprise therefore that the country has resorted to this new US$ 3 billion venture which will be supported by coal from the new Sengwa mine, which has 1.3 billion tonnes of coal reserves.⁽⁴⁶⁾ The last unit of this power plant is scheduled to be completed by 2020,⁽⁴⁷⁾ which confirms that this is a strategic project.

These examples are just a few among other notable cases which show that the use of coal on the continent is increasing, and this trend will persist in the foreseeable future. This is likely happening because there is abundant and cheaply available coal, which is tempting African governments to exploit the fuel. The drive towards poverty alleviation on the continent is almost strong enough to justify the necessity of exploiting coal. Coal can then be seen as one of the resources that can be used to improve economic growth in African countries. Thus, continual development of coal related projects is happening despite the loud voices against the use of coal in this current era of global warming and other environmental concerns. Foreign capital in the form of foreign direct investment is also complicit in coal projects in Africa.⁽⁴⁸⁾

The idea that coal will continue to be cheap in the long term is being challenged on the basis that demand is rising to meet China’s needs and studies suggest that usable coal is becoming less abundant than previously assumed.⁽⁴⁹⁾  At a time when coal production reaches its peak and beyond, the quality of the commodity will decline, mining costs will increase and this will push up coal prices.⁽⁵⁰⁾

Unlike in China where fossil fuels are used to sustain a job intensive economy, thereby lifting 600 million people out of poverty, South Africa harbours one of the most unequal societies in the world with a GINI coefficient index of 0.67.⁽⁵¹⁾ This shows that beneficiaries of economic growth are not necessarily the original targets – the most vulnerable, poor people. In the South African case, about 38 corporate entities, including Anglo American and BHP Billiton, consume 40% of the country’s power at a cost of US$ 0.05 per kWh (very cheap according to world standards), while Eskom increased electricity tariffs by 25% to ordinary citizens using just 5 - 10% of national power.⁽⁵²⁾ To ordinary people, the price hikes are phenomenal as electricity costs leaped from US$ 50 to US$ 120 per month within a three year period, while Eskom is even daring for more hikes to support its capital projects.⁽⁵³⁾

Challenges of environmental pollution and subsequent global warming and health threats are becoming hard to ignore in this era. There is a possibility that international trade can be negatively associated with the carbon footprint of export manufacturers in the near future.⁽⁵⁴⁾ This will hurt the very feeble African economies that are clamouring for fair trade on the global stage. The external costs of coal projects are also high, but difficult to value.⁽⁵⁵⁾ Thus, there could be more harm being done than meets the eye.

Meanwhile, Eskom in South Africa has managed to reach high targets in terms of efficiency in its power stations, even under circumstances of using coal with high ash content.⁽⁵⁶⁾ The company is further exploring other technologies to reduce the negative environmental consequences of using coal, such as underground gasification and various mechanisms of carbon capture.⁽⁵⁷⁾ The country is also exploring the feasibility of using other sources of energy to reduce its dependency on coal, thus helping to reduce the negative impact of coal. For example, at the moment, renewable sources of energy constitute about 1% of South Africa’s energy needs,⁽⁵⁸⁾ when there is great potential for such sources (50,000 megawatts available in wind and 500,000 megawatts in solar power)⁽⁵⁹⁾ in the country.

Concluding remarks

Coal is going to remain a formidable source of power for Africa as long as the resource is available.  The role of foreign capital in the form of the much-needed foreign direct investment in this mix should not be underestimated in the continual development of coal-based projects. The role of this resource will hinge upon the adoption of technologies that will enable the exploitation and subsequent use of coal to be less damaging than they currently are. In this case, understanding the environmental effects of investments in the energy sector in developing countries has become even more important.⁽⁶⁰⁾ Coal will, however, not remain as cheap as it has been for the long period up to the present. Energy-efficient technologies and diversification of energy sources would stand Africa in better stead for economic development overall.⁽⁶¹⁾ Otherwise, there is still scope to adopt renewable sources of energy to achieve the same economic development, which in this case is more sustainable than coal based power projects.

Written by Written by Tariro Kamuti ⁽¹⁾

NOTES:

(1) Tariro Kamuti is a Consultant with CAI with interests in biodiversity conservation and governance issues surrounding sustainable utilisation of natural resources. Contact Tariro through Consultancy Africa Intelligence’s Enviro Africa Unit ( enviro.africa@consultancyafrica.com). Edited by Liezl Stretton.
(2) ‘The coal resource: A comprehensive overview of coal’, World Coal Institute, 2005, http://www.worldcoal.org.
(3) Kebede, E., Kagochi, J. and Jolly, C.M., 2010. Energy consumption and economic development in Sub-Sahara Africa. Energy Economics, 32, pp. 532-537.
(4) ‘The coal resource: A comprehensive overview of coal’, World Coal Institute, 2005, http://www.worldcoal.org.
(5) Ibid.
(6) ‘Coal mining in Africa – overview’, Mbendi Information Services, http://www.mbendi.com.
(7) Eberhard, A., ‘The future of South African coal: Market, investment, and policy challenges’, Stanford University, January 2011, http://iis-db.stanford.edu.
(8) ‘The coal resource: A comprehensive overview of coal’, World Coal Institute, 2005, http://www.worldcoal.org.
(9) Odendal, N., ‘Zimbabwe should focus on existing coal resources’, Mining Weekly, 30 March 2012, https://www.miningweekly.com.
(10) ‘Nigeria’s coal deposits identified, how we made it in Africa’, 2 July 2010, http://www.howwemadeitinafrica.com.
(11) ‘Bright future for African coal – AfDB’, Mining Weekly, 23 May 2008, https://www.miningweekly.com.
(12) Ibid.
(13) Ibid.
(14) Ibid.
(15) Ibid.
(16) Ibid.
(17) Davie, K., ‘SA is nearing peak coal, say scientists ’, Mail and Guardian, 25 September 2010, http://mg.co.za.
(18) Hartnady, J.H., 2010. South Africa’s diminishing coal reserves. South African Journal of Science, 106, pp. 1-5.
(19) Bian, Z., et al., 2010. Environmental issues from coal mining and their solutions. Mining Science and Technology, 20, pp. 215–223.
(20) Ibid.
(21) Cock, J., 2007. The war against ourselves: Nature, power and justice. Wits University Press: Johannesburg.
(22) Vermeulen, A. ‘South Africa’s coal mining industry facing numerous challenges’, Mining Weekly, 15 March 2013,
https://www.miningweekly.com.
(23) Eberhard, A., 'The future of South African coal: Market, investment and policy challenges', Stanford University, January 2011, http://iis-db.stanford.edu.
(24) Ibid.
(25) Ibid.
(26) Ibid.
(27) ‘South Africa: New coal-fired power stations will cause water crisis, warns Greenpeace’, Word Press, 12 July 2012, http://washafrica.wordpress.com.
(28) Ibid.
(29) Ibid.
(30) Falcon, R., ‘The future of coal in South Africa’, Fossil Fuel Foundation, http://www.eepublishers.co.za.
(31) Ibid.
(32) Sharife, K., 'South Africa's dirty secret: Eskom and the Medupi power plant', Plurpol Consultancy, 31 May 2013, http://www.plurpol.org.
(33) Van Gelder, J.W. and Spaargaren, P., ‘Financing of Kusile and Medupi power plants, South Africa’, Pacific Environment, 26 October 2010, http://pacificenvironment.org.
(34) Ibid.
(35) Patel, K., ‘Eskom’s Medupi-sized headache’, Daily Maverick, February 2013, http://www.dailymaverick.co.za.
(36) ‘World Bank approves multi-billion-dollar loan for coal-fired power plant in South Africa’, Democracy Now, 9 April 2010, http://www.democracynow.org.
(37) Van Gelder, J.W. and Spaargaren, P., ‘Financing of Kusile and Medupi power plants, South Africa’, Pacific Environment, 26 October 2010, http://pacificenvironment.org.
(38) Steele, M., ‘Another coal-fired power station to fuel South Africa’s addiction?’, Greenpeace, 24 February 2012, http://www.greenpeace.org.
(39) Sharife, K., 'South Africa's dirty secret: Eskom and the Medupi power plant', Plurpol Consultancy, 31 May 2013, http://www.plurpol.org.
(40) ‘Coal to liquids’, World Coal Association, http://www.worldcoal.org.
(41) Ibid.
(42) Eberhard, A., ‘The future of South African coal: Market, investment, and policy challenges’, Stanford University, January 2011, http://iis-db.stanford.edu.
(43) ‘Coal to liquids’, World Coal Association, http://www.worldcoal.org.
(44) Roelf, W., ‘RioZim: First power from coal plant by 2014’, Reuters, 3 March 2011, http://www.reuters.com.
(45) Ibid.
(46) Ibid.
(47) Ibid.
(48) Sharife, K., 'South Africa's dirty secret: Eskom and the Medupi power plant', Plurpol Consultancy, 31 May 2013, http://www.plurpol.org.
(49) Heinberg,  R. and Fridley, D., ‘The end of cheap coal’, Post Carbon Institute, 14 July 2011, http://www.postcarbon.org.
(50) Ibid.
(51) Sharife, K., 'South Africa's dirty secret: Eskom and the Medupi power plant', Plurpol Consultancy, 31 May 2013, http://www.plurpol.org.
(52) Ibid.
(53) Ibid.
(54) Falcon, R., ‘The future of coal in South Africa’, Fossil Fuel Foundation, http://www.eepublishers.co.za.
(55) ‘The true cost of coal: The monstrous price of South Africa’s coal addiction’, Greenpeace, 26 October 2011, http://www.greenpeace.org.
(56) Falcon, R., ‘The future of coal in South Africa’, Fossil Fuel Foundation, http://www.eepublishers.co.za.
(57) Ibid.
(58) Falcon, R., ‘The future of coal in South Africa’, Fossil Fuel Foundation, http://www.eepublishers.co.za.
(59) Sharife, K., 'South Africa's dirty secret: Eskom and the Medupi power plant', Plurpol Consultancy, 31 May 2013, http://www.plurpol.org.
(60) Spalding-Fecher, R. and Matibe, D.K., 2003. Electricity and externalities in South Africa. Energy Policy, 31, pp. 721-734.
(61) Kebede, E., Kagochi, J. and Jolly, C.M., 2010. Energy consumption and economic development in Sub-Sahara Africa. Energy Economics, 32, pp. 532-537.