ANC delegates from the Mpumalanga province have called on government to consider communities dependent on coal mining when transitioning to cleaner energy. (Dean Hutton/Bloomberg/Getty Images)
Replacing coal with renewable energy will reduce employment in South Africa, Mineral Resources and Energy Minister Gwede Mantashe warned this week.
In an interview with the Mail & Guardian on the sidelines of this year’s Investing in African Mining Indaba, Mantashe said jobs would be lost during the transition from coal-fired energy to renewable power in a country already grappling with an expanded unemployment rate of 46.2% of the labour force.
The answer, he said, was to overhaul the country’s economic framework.
“For example, if you repurpose a coal power station to gas, it is likely to generate similar amounts of energy and employ a not so different number of people, but you reduce the carbon emissions. So, they [government] will look at it holistically and develop an alternative economic framework,” he said.
Michelle Manook, the chief executive of the World Coal Association, said during a panel discussion on a just transition and the future of coal that South Africa, with one of the world’s highest jobless rates, must heed a warning against rushing through a transition without weighing the local costs and benefits.
“South Africa must learn from more developed economies such as Spain where the cost of green job creation was in excess of $860 000 while the country lost 2.2 jobs for every green job created,” he cautioned.
South Africa’s official unemployment rate has risen worryingly in recent years — worsened by the Covid-19 pandemic— climbing to 35.3% of the labour force in the fourth quarter of 2021 from 34.9% in the third quarter, according to Statistics South Africa.
“Renewables alone are an expensive way of creating jobs. Coal remains a strategic asset and not a straggling one,” warned Manook.
She said that whatever jobs come from renewable energy they cannot replace lost employment on a 1:1 ratio. There are 92 670 jobs with R31.4-billion in employee earnings that would be lost in coal mining alone, should a complete transition to a low-carbon economy ensue.
A self-proclaimed coal fundamentalist, Mantashe has long championed the commodity, defending the stance by saying the government was moving to Clean coal technology.
“I worked longer in copper mining than in coal mining so ideally I should be a copper fundamentalist,” the minister joked during the M&G interview “but all we need to do with clean coal energy is do research and case studies. We have a case study with the World Bank in Mpumalanga and we are hoping that experiment will be successful, then we can use more coal.”
Perhaps giving credence to Manook’s warning; despite the recent sharp spike in unemployment, mining is one of the industries that has recently been gaining employees.
The just transition — a reference to a fair and equitable shift away from fossil fuels towards a greener, safer and more inclusive low-carbon economy — stands to challenge growth in employment in the mining sector and as a contributor to South Africa’s GDP.
According to the gazetted Exploration Strategy for the Mining Industry report in 2020, the mining sector accounted for 8.2% of GDP, earned more than R575-billion in exports, while contributing R608‑billion in total mineral sales, R27.2-billion in corporate taxes and R11.8-billion in royalties.
Speaking at the Coal Colloquium earlier this year, Mantashe said that in 2020, coal was the highest revenue earner, contributing 21.4% (R130.57-billion) of total mining revenue (R608.99-billion). It was the third-largest employer in the mining industry after precious metals and platinum group metals.
“Economic development is driven by sustainable job creation and any just transition in Africa — and particularly in South Africa — needs to be job receptive. A just transition needs to consider the implicated communities and their future,” Manook said.
Nombasa Tsengwa, the chief executive-designate of Exxaro Resources, said the number of jobs that will be created by renewable energy has not yet been determined.
“The jury is still out on how many jobs renewable energy sources will provide but one thing for sure, the coal industry is the third-biggest supplier of jobs [in the mining sector] in this country. So, we cannot be irresponsible with that,” Tsengwa said.
He noted that for each job in the industry, there are 10 people who depend on it. She said with Exxaro being a coal supplier to state power utility Eskom — which produces the bulk of the country’s electricity, most of it coal-fired — the group was looking at how it could repurpose skills across the value chain.
Veteran energy analyst Peter Major said the term “just transition” was no more than a buzzword, much like the term “transformation”. He said that Mantashe and President Cyril Ramaphosa did not factor the “just transition” on the gold mines in the early 2000s.
“The gold mines used to employ 580 000 men and now they employ 80 000. Who kicked those 500 000 men out of work? Gwede and Cyril did. They were head of the union. They said, ‘If you can’t give us what we want, close your mine or we’ll close it for you.’ So what kind of just transition will this one be?” he added.
Before the closure of gold mines, the precious metal was the largest employer in the mining industry, peaking at 763 319 people employed in 1987. It gave way to platinum group metals — which include platinum, palladium, rhodium, iridium, osmium, and ruthenium — in 2006.
In 2021, the gold industry employed just 93 998 people, according to the Minerals Council South Africa..
“He [Mantashe] is acting like a coal fundamentalist. He is acting like he doesn’t care about gold and he helped a half a million men lose their jobs, but all of a sudden he cares about coal. He has helped destroy the gold industry,” Major said, adding, “The just transition will definitely shift people’s work.”
Addressing the media on Monday on the first day of the mining indaba, Mantashe groused about how “everyone is telling us to get out of coal but they are still demanding coal from us”.
He said his department was looking into clean coal technology, but added: “Clean coal technology doesn’t just fall from the sky, you experiment with it.”
Mantashe said global targets to reduce greenhouse gas emissions entailed moving away from pollution-emitting combustion engines to greener alternatives that use electric or hydrogen fuel cell technologies. In turn, existing coal power plants nearing their end of life date would be transformed into renewable and hydrogen plants.
But the government’s South Africa Hydrogen Valley report shows that in the space of five years, hydrogen power plants can only provide an estimated additional 14 500 to 31 800 employment opportunities a year.
Jacob Mbele, the deputy director general at the department of mineral resources and energy, told the M&G that it was aware that renewable energy cannot provide 1:1 employment in the move from coal.
“If you look at where renewables are likely to be, it may not be in the same areas as where jobs in coal are being lost. So, when you do the transition, it does not mean that you are going to replace energy with energy. You may even have to develop new economies that are almost alike,” he said.
Mbele said there was a difference between an energy transition that entails moving from dirtier energy to cleaner energy sources and the just transition, which is about leaving people better off and not worse off.
“A lot of people think the just transition is a DMRE [department of mineral resources and energy] issue. It’s a country issue because it involves everyone and other industries,” he said.
Anathi Madubela is an Adamela Trust business reporter at the Mail & Guardian.
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