Counting the cost: Coal mine closures to affect 2.5 million people

An overlooked aspect of the just energy transition is the impact coal mine closures will have on mining communities.

Now we have a better idea, thanks to some research published in the Journal of the Southern African Institute of Mining and Metallurgy.

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Five coal-fired power plants and 15 coal mines will likely close by 2030, and another four plants and 23 mines by 2040. This will impact the livelihoods of 2.5 million people, most of them in Mpumalanga.

Digging deeper into the numbers, the five coal-power stations due for retirement by 2030 will withdraw 8.9GW from the grid, followed by a further 14GW when another four power stations are likely decommissioned by 2040.

The closure of 15 mines by 2030 will withdraw 29.5 million tons a year (mtpa) from SA’s coal production, followed by a further 106 mtpa as an additional 23 mines are closed by 2040.

This will impact 69 mining host communities and 21 municipalities.

“The impact of mine closure on the 2.5 million residents of host communities will be significant, particularly as levels of income, employment, and education are already very low and many municipalities are in financial distress,” say the authors.

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“The South African approach to the just transition needs to take local realities into account, and the narrative must support an effective transition that does not undermine energy security and economic growth.”

Not just households affected

There are 66 operating coal mines in SA, most in Mpumalanga, owned by 32 private companies.

The five largest companies – Seriti, Sasol, Exxaro, Thungela and Glencore – produce 77% of the country’s coal.

Together, they produced 231 million tons of coal in 2022, generating earnings of R28 billion and employing nearly 91 000 people. Earnings would have been higher in 2022, but for the well-publicised problems at Transnet, resulting in lost export revenues of R22.7 billion in 2022.

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Most coal mining communities are concentrated in the western part of Mpumalanga and north-western KwaZulu-Natal. Some 37% live below the poverty line of R19 600 annual household income, and 39% are unemployed, which is higher than the national average, says the research. In rural villages dependent on coal mining, the percentage living below the poverty line shoots to 57%. 

Mine closures will impact not just these households but the municipalities reliant on income from mine employees and companies. National Treasury data shows fruitless and wasteful expenditure of R7 billion in these host municipalities in 2021.

“The poverty and poor living conditions of thousands of people in coal mining host communities is distressing and is not being adequately addressed by the government,” says the research. 

The high unemployment in these communities “poses a threat to the social licence to operate for coal mining companies, which in turn is an energy security risk and economic risk for the country”.

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“Many of these communities have experienced mine closures and do not have the skills and opportunities to take advantage of the inevitable transition, let alone the transition to clean energy. The majority of renewable energy development has taken place in the Northern Cape, far from those living in the coalfields. However, eMalahleni (Witbank) has been identified as a Renewable Energy Development Zone (REDZ) based on its solar PV potential and proximity to transmission infrastructure.”

So what’s the solution?

The authors say SA’s shift from fossil fuels to renewable energy is inevitable. The reliance on coal-fired power has led to dramatic rises in electricity tariffs and damaged the economy, while renewable energy investment around the world has produced twice as many jobs as investments in fossil fuels. 

The solution proposed includes improving governance across affected municipalities. A just transition is possible, provided the country pursues a dual energy generation strategy (coal and renewables), collaborates with other countries in the region to apply comparative advantages, and finds the “political will and integrity” to enable the investment and development required for the just transition to manifest.

Another study by Megan Cole of the University of Cape Town, looking at the broader risks of mine closures in SA, found at least 360 mining host communities in South Africa and 230 operating mines. Some six million people in these communities are likely to be impacted by mine closures.

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Of the 32 mines with a ‘very high’ likelihood of closure rating, 29 are coal mines, and three are gold mines.

Those communities in urban hubs with diverse economies will be less affected than the rural communities in remote areas. Cole established a risk map based on a range of criteria and found gold and coal mining areas dominated because of the risks of acid mine drainage to water resources and degradation of arable land.

Several platinum mines on the Western Limb in North West province also pose a risk due to the threat to arable land, terrestrial ecosystems and protected areas. The lowest-risk areas are in the Northern Cape, where there is no arable land and which has the least-threatened ecosystems, and Limpopo, where the mine water threat is low and there are no endangered ecosystems.

This article was republished from Moneyweb. Read the original here