South Africa’s Integrated Resource Plan (IRP) 2025 is set to significantly reshape the country’s coal industry, the Minerals Council of South Africa has said, even as coal output rose 1.5% in September amid a broader mining recovery.
On a year-on-year bases, total mining production for South Africa increased by 1.2% in September, primarily driven by coal alongside platinum group metals and gold.
However, Bongani Motsa, acting chief economist for the Minerals Council, said on Friday that Eskom’s coal consumption could flatten, posing significant disruptions for the coal sector, mainly as a result of the IRP.
“The IRP 2025 marks a pivotal shift, with no new coal-fired power plant build planned. Without technological interventions such as carbon capture and storage, Eskom’s coal consumption could decline by approximately 60 million tons by 2042,” said Motsa.
This marked decline in coal uptake by Eskom “would have significant socio-economic implications, potentially undermining South Africa’s ability to generate foreign exchange” earnings.
In 2024, coal exports alone generated over R113 billion in foreign exchange for South Africa.
The coal sector has notched up some recovery. Output grew 1.5% in September, contributing 0.4 percentage points to overall growth of the industry.
This was aided by marginal improvements in rail and port efficiencies, which supported coal exports. Shipments of the energy commodity climbed higher by nearly 1 million tons compared to the same period a year earlier.
“However, the IRP 2025, which excludes new coal-fired power plant build, is expected to significantly reshape the industry,” said Motsa.
Major coal miners in South Africa include Exxaro Resources and Thungela Resources.
With the IRP pivoting more on “expensive renewables” and given the need to invest in transmission infrastructure, address the municipal debt and service delivery crisis, the South African economy will likely “face a prolonged period of elevated electricity prices”, which are afflicting local miners and manufacturers.
“From a mining perspective, the improvement noted by National Treasury on the performance of Eskom’s ability to supply electricity and the uptick in Transnet’s operational performance bode well for mining. Yet the sector still faces the threat of high electricity tariffs and slow reforms on the rail side,” noted Motsa.
The gross value added by the mining sector contracted by 3% in the first half of the year relative to 2024. Transnet failed to achieve 60% of its targets set to improve operational performance for this financial year and electricity tariffs have increased on average more than 900% since 2008.
“The mining sector, which employs around 468 000 people, remains under pressure,” Motsa added.
South Africa’s mining sector is likely to grow by 2.5% quarter-on-quarter in the third quarter of the current year a 4.7% growth in the earlier quarter.
Among the commodities that recorded year-on-year declines in September weere iron ore, which was the most significant as it accounts for 16.41% of total mining production, iron ore output fell by 2.2%, largely due to plant maintenance at one of the country’s major producers.
However, export volumes rose by 12.6% year-on-year to 6.8 million tons, reflecting improved rail logistics by Transnet. Other notable production declines included copper, manganese ore and nickel.