Molteno-Indwe coalfield: Council for Geoscience research

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Mineral Resources and Energy

20 October 2020
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

The Council for Geoscience updated the Committee on its research project to evaluate the potential of the Molteno-Indwe coal field in the Eastern Cape. Although questions were raised by the Committee Members on the viability of the project, there was consensus that the project was relevant especially in the present times of escalating energy demand in the country. Members were also impressed by the level of detail in the Council’s presentation, and on how it compared the ongoing efforts to develop new South African coal resources with new coal projects in countries overseas.

The Council explained that its mandate was limited to research and development. Other departments and investors could follow their preliminary work with exploration and mining. The Council assessed the the quality and quantity of coal in the Molteno-Indwe area to support development in the Eastern Cape Province through energy. Using descriptive statistics and maps, it illustrated the regions where it carried out surveys and provided details on the quality and quantity of coal deposits that could be found there. Since its work involved collecting samples, at times on private property, the Council stressed that it always made sure that it engaged stakeholders before carrying out its scientific activities. Although in most cases individuals were cooperative, the Council reported that it encountered a commercial farmer who denied it access to his property. The research suggested that the coal resource amounted to about 530 million tons, worth about R122 billion.

Most Members agreed that this project had great potential, but the Council was also questioned on whether the development of a new coal resource was environmentally or financially viable. The Eastern Cape was an ecologically precious place which stood to be damaged by coal mining. Government did not have the capacity to finance the project. Notwithstanding these observations, Members appreciated the work that the Council did and encouraged the Department of Mineral Resources and Energy to support it. Their questions included possible pollution from project, the mining methods that were going to be used as well as the expected average life spans of mines in the area. Members asked how much of the expected profits from the coal would go to benefit locals in the Eastern Cape, and how much was going to be channelled towards the country’s fiscus.
 

Meeting report

The Chairperson greeted everyone and apologised for his delay. He explained that it was due to problems with internet connectivity. He accepted apologies from the Minister of Mineral Resources and Energy, Mr Gwede Mantashe, Ms N Hlonyana (EFF) and Mr M Nxumalo (IFP).  He said that the purpose of the meeting was to receive an update on the work of the Council for Geoscience (CGS). He invited Adv Thabo Mokoena, Director-General, Department of Mineral Resources and Energy (DMRE), to introduce his team.

Adv Mokoena confirmed that the CGS was going to provide an update of its work at the Eastern Cape in the Molteno-Indwe coalfields. He asked the Chairperson of the CGS board to make introductory remarks.

CGS Update on Geoscientific Assessment of Molteno-Indwe Coalfield
Dr Humphrey Mathe, Chairperson, CGS, said the Council was proud to provide the Committee with an update of its work at the Eastern Cape. Research on the Molteno project was providing interesting results, and the presentation would give the Committee a glimpse of some of these important findings. Mr Mosa Mabuza, Chief Executive Officer, CGS, lead the presentation.

The CGS’s presentation contained maps, graphs, tables, and figures. It was divided into six sections:
Project methodology.
Assessment of existing data.
Assessment from newly generated data.
Implementation, future work, and time implications.
Carbon capture utilisation and storage
Possibilities of the Molteno-Indwe plant

The Council explained that the project under discussion assessed the the quality and quantity of coal within the Molteno-Indwe coalfield to support development in the Eastern Cape Province through energy. Results from the survey were accumulated from the towns of McClear, Indwe, Dordrecht, Sterkstroom, Molteno, Bonnyvale, Burgersdorp, Jamestown, and Lady Grey.

Project methodology
The CGS explained that in carrying out its projects it always engaged stakeholders in the area. For this project, it comprehensively engaged the municipal and traditional authorities, as well as the farming community. Despite successfully doing so, it faced resistance from one commercial farmer in the Molteno area who would not allow the research team onto his land.

Assessments
The survey first involved examining existing data. This revealed that there were 97 borehole logs its database of which 27 were in the Molteno area and 70 in the Indwe area. Secondly, 68 new samples were collected in these two areas.

The results from these samples were computed and used to design models that illustrated the thickness and depth of seams. Using diagrams, this segment of the presentation showed that the Guba seam in the Indwe area was thickest towards the east, and deepest towards the northern and southern areas. In the Molteno area, the Guba seam was thickest towards the western area and deeper in the south.

The CGS found a correlation between the intensity of dolerite intrusions and coal ranks. It stated that coal deposits that were affected by dolerite intrusions in the Molteno-Indwe area tended to be of better quality.

The chemical assessment of surface coal samples found that the Guba seam in Indwe area yielded an average calorific value of 16.6 MJ/kg, ash contents of 47.1%, volatile matter of 7.7%, and total sulphur of 0.3%. The Indwe seam in the Indwe area, on the other hand, possessed a calorific value of 14.6 MJ/kg, ash 56.2%, volatile matter of 9.8%, moisture of 1.8%, and sulphur of 0.2%.

A petrography assessment also revealed that coal rank increased from the western region to the eastern region. This was attributed to the density of dolerite intrusions in the east. The CGS also provided statistical measurements of seam thickness in the Molteno-Indwe coalfields. The total coal tonnage in the area surveyed was about 530 Mt, and 473 Mt at 0.8m thickness cut off. The estimated value of this coal was R122 billion. Newly generated data showed that the Indwe seam in the Indwe area had the least economically significant coal deposits compared to the Guba seam.

Implementation, future work, and time implications
The project had three phases. The first phase had been successfully completed. It involved proximate and ultimate analysis of the 68 samples alluded to earlier. The second phase, which was underway, included further geoscience research to ascertain, among other things, the concentration of rare earth elements in the area. The third phase on the other hand focused on building a public-private partnership for the construction of a modular power plant with conditions being specified for the use of clean coal technology.

Carbon capture utilisation and storage
The CGS suggested that it was possible to target the geothermal energy production to offset the energy demand of running the Carbon Capture Utilisation and Storage (CCUS) plant. It also stated that ongoing research in South Africa identified possible target regions that included offshore oil/gas reservoirs and fewer onshore deep saline basins. However, the Council stated that more research was needed to provide a detailed characterisation and modelling of the potential CCUS reservoirs through integrated geoscience research. This also included establishing the economic viability of the project. It involved identifying sites that were closest to the coal-generation plants.

Possibilities of the Molteno-Indwe plant
The CGS said the possibilities of the proposed project were great, especially considering that the Lethabo Power Station used coal with properties similar to that found in the Molteno-Indwe coalfield. The Council referenced the United Kingdom, Brazil and India as nations that are finding alternative ways of using coal in an ecologically friendly manner. Other possibilities included the conversion of coal into liquid and gas. This can feed into industrial hubs or special economic zones such as Coega and the industrial development zone in East London, which are energy intensive.

Adv Mokoena thanked Mr Mabuza for the presentation and invited questions from the Committee.

Discussion
The Chairperson thanked the CGS and the DMRE for the presentation, and opened the meeting for discussion.

Ms C Phillips (DA) asked for clarity on the type of mining method which was proposed at the farm where the CGS’s operations were rejected.

Mr V Zungula (ATM) thanked the CGS for its presentation. He asked for the estimated air pollution ratios that were expected from the proposed project and enquired if they were in line with international standards. Like Ms Phillips, he was also concerned about the mining methods that were going to be used in the project. If strip mining was a possible method, he asked how the CGS intended to deal with the problem of combustion in the dumping area. He enquired, given the calculated quantity of coal beneath the surface, what was the estimated lifespan of the mine that was going to operate in the area. Finally, he asked how the proposed project was going to impact the energy mix.

Mr K Mileham (DA) welcomed the presentation and remarked that it was pleasant to know that South Africa still had mineral resources in abundance that were yet to be exploited. However, he expressed concerns about other effects of coal mining in the area. He reminded Committee, and the CGS, that the Eastern Cape was a “ecologically precious area” hence he was wondering if the CGS had considered how large numbers of coal trucks would impact the roads and infrastructure in the area.

Mr Mileham also displayed concerns about the financial viability of the Molteno Project. He claimed that currently the world’s financial institutions were not prepared to finance coal driven power plants. This implied that the proposed project was to be financed entirely by the government. This carried many uncertainties considering that ESKOM was facing a R480 billion debt, and that cost as well as time overruns in some of its projects were massive. He asked if it was wise to place so much faith in a project that was not going to be financially viable, and that was likely not to be completed in a reasonable time frame.

Mr S Kula (ANC) expressed appreciation for the Council’s work and sent his best wishes to its team for future endeavours. He asked how the CGS intended to exploit the large mineral reserves that were alluded to earlier in the presentation. He also asked how the incident with the commercial farmer impacted the proceedings of the project in the future. Mr Kula recommended the proposed project should avoid acid mine drainage which was a recurring problem in mining areas. He appreciated how the CGS analysed the viability of the project from a global perspective. Finally, he referred to a section in the presentation where the CGS stated that the estimated value of the project (R122 billion) was not going to be enough. He asked why this amount was alleged not to be enough, and enquired how much of this money was going to benefit the local communities in the Eastern Province, and the country’s fiscus.

Mr Mahlaule (ANC) agreed with Mr Kula and appreciated that the CGS presentation was so comprehensive that it provided an international context. He said countries in the global south were often mere receivers of guidelines that justified why they had to abandon coal. However, the Council’s presentation illustrated that some of the leading countries in the world were beginning to reconsider coal as a valuable energy resource. The fact that the United Kingdom (UK) was leading the talks on alternative methods of using coal in the energy mix exposed the biased nature of international policies. He said it was possible that when the UK, and other countries in the global north, campaigned for the restriction of coal generated power, they were under the impression that their coal reserves had been depleted. However, it is possible that recent discoveries of this energy resource rejuvenated their interests. He then emphasised that South Africa, like most countries, had to prioritise its interests before abandoning the use of coal. Mr Mahlaule commended the work done by the CGS and encouraged the DMRE to support it. He also urged the Committee to do the same as this was going to not only augment the country’s energy supply, but create employment opportunities.

Responses
Mr Mabuza replied to Ms Phillips that there were no mines yet. He explained that the CGS focused on the geological aspects of the mineral resources. This included carrying out surveys and collecting and testing samples. In carrying these surveys, the CGS always engaged the local stakeholders and authorities in the area. He said many of them welcomed the Council’s scientists onto their property except for the one incident that was alluded to in the presentation.

In response to Mr Zungula’s question, Mr Mabuza reiterated that the CGS only characterised and quantified deposits. After this process, entities concerned with exploration and mining would then ascertain the optimal methodologies of extracting these resources. He stressed that the CGS was proposing a small Modular Power Plant that was not near the size of the Mudupi and Kusile Power Stations. He explained that as demand for energy in South Africa escalated, the need for renewable energy also increased, but fortunately in the case of South Africa there was the provision of coal. He assured the Committee Members that the Molteno project was within the framework of the country’s energy mix.

Mr Mabuza explained to Mr Zungula that the area in question was not going to be exploited by a single mine. To ascertain the average lifespan of these mines, he said more work needed to be done to characterise the basin. However, from the estimated 320 million tons of [exploitable] coal beneath the surface, and the assumed 10 million tons production per annum, he said it was possible for mines to operate between 30 and 50 years.

Dr Mathe interjected and commented on the energy mix. He pointed out that some of the coal deposits identified in the survey were discovered near wind farms in the Molteno and Sterkstroom areas. When these wind farms had been constructed, authorities had to consult entities that had prospecting rights in the area. Given this scenario, it was possible to have a modular coal-fired power plant and a wind farm in the area, thereby, increasing the energy mix. Unlike wind farms, that created barely any employment for the people in the area, a coal plant had the potential to create several opportunities for the people in the Province.

Mr Mabuza next addressed Mr Mileham’s question on the possible degradation of the Eastern Cape’s ecology. He replied that every province in South Africa deserved to be recognised as ecologically precious. However, he mentioned that matters around that topic were beyond the CGS’s scope. Once again, he explained that the Council was only concerned with research and development. He referred Mr Mileham to Adv Mokoena for more information. However, he assured him that any form of exploration in the region would adhere to the government’s environmental guidelines.

Mr Mabuza welcomed Mr Kula’s compliments, and responded to his question on how the challenges with the commercial farmer affected the Council’s work on the project. He explained that the CGS preferred a relationship-building approach whereby it engaged its stakeholders. He said it was fortunate that only one stakeholder denied it access to their property because if the number of unwilling parties were greater, it would have been difficult for the Council. He expressed disappointment in the individuals that had denied the CGS access to their property because the Council was not only concerned with mineral deposits but the general geological structure of the country. For instance, he referred to the recent earth tremors in the Western Cape as another geological concern that fell within the responsibilities of the Council. It was therefore unfortunate when people denied such an important entity access to their property. He hoped that with time people would begin to appreciate the CGS’s work.

In response to Mr Kula, Mr Mabuza said the direct value of R122 billion was the absolute minimum value of what was beneath the surface. He pointed out that this could be augmented in three ways. The first was through confirming if there were additional coal resources. The second was through applications from prospective miners. He pointed out that mining activities always jolted economic activities and he anticipated that this would benefit the inhabitants of the Eastern Cape. He said he was aware of social and economic responsibilities mines had when developing the areas they operated in. In the Eastern Cape, he stressed that the need to develop society was more urgent than ever. He described driving from town to town in the province as “staring at poverty right in its face”. The installation of a modular power plant had the capacity to change these socio-economic struggles.

Finally, Mr Mabuza expressed his gratitude for Mr Mahlaule complements and welcomed his recommendations.

Adv Mokoena thanked Mr Mabuza for his responses and added a few comments on his response to Mr Mileham. He said the government’s role was to create a conducive environment for investors. In fulfilling this objective, the CGS played a developmental role which was a direct response to the needs of the country. He said that this was the level of appreciation that he encouraged Committee Members to have of the work done by the CGS. He stated that there were other departments that dealt with the actual extraction of resources as this was beyond the CGS’s mandate of research and development.

Adv Mokoena also confirmed Mr Mabuza’s response to Mr Mileham that the DMRE ensured that all mining activities adhered to the ecological concerns of the country. He thanked the Committee for its comments and recommendations.

Further discussion
The Chairperson thanked the CGS and the DMRE for their responses. He mentioned, once again, that the purpose of the meeting was to obtain an update on the Molteno project. The agenda also included an assessment of the role institutions like CGS played in surveying mineral resources, and in luring potential investors. He agreed with representatives from the CGS and the DMRE that the debate around which resources to include in the energy mix, and which ones to exclude was an ongoing one. Even in the Committee it was going to persist.

The Chairperson also agreed with the CGS that its task was research and development. He said he understood when it avoided questions around the how mineral extraction was going to be carried out. This was a political and socio-economic terrain that only those with the authority and power had answers to.

The Chairperson said he believed all Members of the Committee had received the update from the CGS. He said he personally did not see the reason why the Committee would not support the initiative unless there were Members who felt the DMRE was not executing the project lawfully. He also mentioned that the CGS helped South Africa attract foreign investment to the mining sector. The knowledge generated by this entity helped South Africa boast to the world with confidence about the actual amount of mineral resources it possessed.

The Chairperson said that, armed with the knowledge of mineral resources beneath the surface, it was possible for the DMRE to assess some of the challenges in the sector. For instance, he suggested that the DMRE could evaluate its licencing regimes to see if they were sufficient to generate economic development and create employment faster. He said if South Africa was to build an economic recovery plan after the COVID-19 pandemic, such measures were going to play an important role. Therefore, the knowledge generated by the CGS was crucial especially if the country were to make an urgent intervention for the post-COVID-19 economic recovery plan.

Finally, the Chairperson asked if he could release the CGS and the DMRE.

Mr Mokoena replied that he acknowledged the recommendations by the Chairperson and thanked the Committee for its contributions and support.

Before adjourning the meeting, the Committee Secretary and Mr Mahlaule reminded the Chairperson that the consideration and adoption of minutes were scheduled for this meeting.

Consideration and adoption of Committee minutes

The Chairperson apologised and suggested that they deal with the minutes immediately.

The minutes of 01 September, of 13 October, and 14 October 2020 were adopted without amendments and objections.

The minutes of 02 September were adopted with amendments.

The Chairperson thanked Committee Members and said they had done very well.

The meeting was adjourned.

 
 

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