After a decade of rapid technological and policy shifts in energy sectors, 2020 has brought disruption across the energy landscape. The consultancy McKinsey’s forecasts from their global energy insights show that a rebound to demand levels before Covid-19 takes one to four years for power, oil and gas, whereas coal demand does not return to 2019 levels.
The decline in coal is forecast to continue, as gas and, increasingly, renewables are more economical alternatives in the power sector. This does not come as alarming news to coal miner Exxaro. The mining sector has been facing pressure from governments, investors, and society to reduce carbon emissions. Mining is cited as being responsible for 4% to 7% of greenhouse gas (GHG) emissions globally.
“One of the things that you do as a coal miner is to sell your coal to power stations and we saw that within our markets (predominantly Europe), which we’re selling coal to, with Germany among the biggest, there were already talks of renewables,” says Mxolisi Mgojo, CEO of Exxaro, reflecting back to almost two decades ago when some European governments kickstarted their long-term plans to phase out coal.
By 2008, as the then head of the coal business at Exxaro, Mgojo witnessed that the shift from coal had started coming on very strong and it was already happening in Europe. It was at this point in time that the miner said, “South Africa tends to be very fast followers if not leaders.” Therefore, if this shift is happening in Europe, it will eventually trickle down to SA. “It was a case of when.”
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