The country accounted for 86% of Africa’s coal consumption in 2023.
The International Energy Agency’s (IEA) Coal 2024: Analysis and forecast to 2027 report expects coal consumption in Africa to have increased by 6 Mt (million tonnes) to a total of 191 Mt.
South Africa’s share of this is expected to increase to 165 Mt.
The increase is driven mainly by the improved performance of coal-fired assets operated by Eskom, the state-owned power utility of South Africa, says the report released today (18 December).
In its estimation, the IEA says South Africa’s coal sector is at a crossroads.
Economic activity in South Africa has seen a slight improvement, and a reduction in loadshedding is expected to increase coal demand.
“Despite a projected increase of over 50% in nuclear generation and a doubling of renewable generation, strong electricity demand growth is expected to create room for an additional 14TWh of coal-fired generation in South Africa in the next three years.
“Global coal demand is set to plateau in the next three years, reaching around 8.87 billion tonnes by 2027. “
The country continues to run three coal-fired power plants of 4.5GW capacity that were previously set for closure. The lifetime of the three plants will be extended until 2030.
“Consequently, we project South Africa’s coal consumption for power generation to rise to 124Mt by 2027.
“The future of coal demand in South Africa will be shaped by policy makers’ decisions regarding the coal-fired power fleet, either to invest in their maintenance to keep them running for longer or to phase them out.”
The report highlights that South Africa’s coal production has flattened amid infrastructure constraints.
It shows that coal production in South Africa grew marginally in 2023 (up 0.7%) to a total of 232Mt.
“The main challenges to increasing production in 2023 and 2024 were the unreliable electricity system and continuous disruptions to coal transport, particularly by rail.
“The state-owned rail operator, Transnet, struggled with collisions, equipment failures, cable thefts, derailments, power outages and increased costs.
“The company’s growing debt has caused auditors to raise concerns about its operational viability, but Transnet says its recovery plan, which started in October 2023 with new loans, will bear fruit shortly.”
Thungela, a major coal producer in South Africa accounting for about 12Mt of the country’s output, said it is optimistic that rail performance will improve in 2025.
“During the first half of 2024 coal production grew by 2.3%. For the second half we expect this trend to have continued, resulting in a total output of 234Mt in 2024 (up 0.8%),” says the report.
In the forecast period the IEA expects coal production in South Africa to remain flat, with a mixed bag predicted for other African coal producers.
“Coal production in other African countries recorded growth in 2022 due to high prices, reaching a total output of 26Mt; 2023, however, saw less change.”
Coal production increased in Zimbabwe (up 0.5Mt) and Tanzania (up 0.8Mt), while output in Zambia decreased (down 0.1Mt).
In Mozambique, Africa’s second largest producer, coal production remained flat in 2023.
“For 2024 and through to 2027 we estimate that most African countries beyond South Africa will maintain their current output levels, with a slight increase in Ethiopia due to the announcement of a new coal mine in Dawozone.
“However, growing steel production is set to propel coal production in Mozambique and Zimbabwe.
“For example, the Benga coking coal mine in Mozambique, owned by the Steel Authority of India, is set to more than triple its current output of 1.3Mtpa in the next few years. In addition, the Mvuma steel plant in Zimbabwe, built by Chinese utilities, began operation in 2024 with an annual steel output of 0.6Mt during the first phase and a target of 5Mtpa in the future, which is assumed to drive up coal production.”
Morocco: Africa’s second-largest coal consumer uses coal exclusively for power generation. Its coal demand is projected to have declined slightly by 3.3% to 9.7Mt in 2024. The addition of 6TWh of renewable generation by 2027, when overall electricity demand grows by 4TWh, is set to reduce coal demand modestly to 9.0Mt during the period to 2027.
Zimbabwe: In March 2024 a steel plant operated by China’s Tsingshan Group began commercial operations in the southern African nation. The initial output is 0.6Mt of steel per year. The long-term goal is to reach a production capacity of 5Mt, positioning Zimbabwe as the continent’s leading steel producer. This will increase annual coking coal demand by 0.4Mt with a further potential of up to 4Mt. In August 2024 a new 335MW unit at the Hwange power plant was commissioned, increasing annual steam coal consumption by around 1 Mt once at full capacity.
Zambia: Two new coal-fired units have received approval after the power cuts following the droughts suffered in the country during 2024. However, the IEA does not expect their commissioning by 2027.
Based on these developments, the Agency forecasts modest growth in total coal demand in Africa, which is expected to increase to 203Mt in 2027.
The report says South Africa remains the African country with the longest project pipeline – mostly focusing on thermal coal, 16 projects with an aggregate capacity of 44Mtpa are proposed.
In Mozambique the Indian-based SAIL announced plans to more than double the capacity of its Benga coking coal mines to 4.5Mtpa, investing up to $200 million over the next four years.
“This expansion aims to secure met coal resources and reduce reliance on other imports, with most of the output intended for SAIL’s internal use in India,” the report says.
In July 2024, Mozambique, Zimbabwe and Botswana announced a significant infrastructure project.
They signed an agreement to develop the new Techobanine deep-water port in the Mozambique capital Maputo and the Limpopo railway line. The project is estimated to cost between $0.8 billion and $1.5bn.
Botswana aims to revive a long-standing rail project to the port, creating a 1,700km rail link that also crosses Zimbabwe.
This would enable landlocked Botswana to export its substantial coal reserves, estimated at around 200 billion tonnes, via Mozambique.
“Rather than focusing on expanding coal mining capacity, some countries are channelling investment into infrastructure development”
South African infrastructure operator Grindrod has announced its full consolidation of ownership of the existing Matola Coal Terminal (TCM).
The company plans to spend $77m to acquire the remaining 35% of shares from Vitol.
Grindrod intends to expand the terminal’s capacity beyond its current 7Mtpa.
The third announced port project is by Thai Moçambique Logistica (TML), which has proposed constructing a new coal port at Macuse, centrally located in the country.
This project includes building a new railway to connect the port with coal mines in Tete Province.
Additionally, neighbouring Malawi aims to import coal from the same province. To facilitate this, the Balaka-Lilongwe railway in Malawi has been rehabilitated, enabling coal exports from Tete Province to Malawi’s capital, Lilongwe.
The country is seen as a favourable option for coal exports compared to South Africa, whose ports are expected to reach capacity limits.
The report says that globally, projects for new, expanded and extended coal mines aimed at the export market have a total capacity of 430Mtpa at the time of writing, marking a decrease of 31Mtpa compared to the IEA’s previous report.
Overall, most projects under consideration are concentrated in Australia (62%), with Russia (11%) and South Africa (10%) following.
“However, due to limited transparency in some countries, such as export-focused Indonesia, these figures should be interpreted with caution.
“Rather than focusing on expanding coal mining capacity, some countries are channelling investment into infrastructure development. In Africa and Indonesia new railways and ports are being constructed to increase export capabilities.”
The IEA report says that after having grown by more than 1.2 billion tonnes since 2020, global coal demand is set to plateau in the next three years, reaching around 8.87 billion tonnes by 2027.
Access the International Energy Agency’s (IEA) Coal 2024: Analysis and forecast to 2027 report
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