"Coal will remain the mainstay of South Africa's energy basket for the next 10 to 20 years," Mantashe said yesterday.
State-owned utility Eskom's new coal-fired power plants, Medupi and Kusile, and independent providers of coal-fired power will sustain the coal industry, he said.
The minister made the remarks at an engagement with the chief executive officers of coal mining firms operating in South Africa. The engagement focussed on the coal sector's challenges, with the aim of finding ways to ensure industry growth and sustainability.
The coal sector will remain a critical component in the country's energy mix for three main reasons, according to Mantashe.
Firstly, South Africa is "highly endowed" with coal, the minister said. South Africa's mineral preliminary gross in-situ value is estimated at $9.6 trillion, of which over 43pc are coal resources, followed by PGM's (31.5pc) and gold (11.7pc).
Secondly, South Africa is highly dependent for its baseload and energy security on coal-generated power. Thirdly, the coal mining and power generation sectors "generate massive revenue and employ thousands of employees", the minister said.
In South Africa, it accounts for 70pc of primary energy consumption, 95pc of electricity generation and about 30pc of petroleum liquid fuels. Coal is also an essential element in the production of iron, steel and ferroalloys and cement, as well as other industrial and manufacturing sectors.
Global coal consumption is expected to continue to rise in the medium term, driven by demand from developing nations in Asia, Africa and South America that will offset declining consumption in Europe and the US.
India, currently South Africa's biggest coal export market, has voluntarily undertook to cut its greenhouse gas (GHG) emissions intensity. But so far, South African coal exports to India — which currently account for half of total export revenues — remain unaffected, Mantashe pointed out.
Strong international coal prices of around $130/t have raised the attractiveness of exports, he said.
Pakistan, Malaysia, Taiwan, and Bangladesh also offer potential exports growth. But there is no scope for further growth in the European Union, because of environmental laws, the minister conceded.
The coal sector produced around 248mn t of coal in 2020, according to the DMRE. Coal was the highest revenue earner, contributing 21.4pc of the mining sector's total revenue of R608.99bn ($39.72bn). The coal sector was also the highest earner of domestic sales revenue and contributed 53.42pc of a total of R159.16bn. The sector generated 10.13pc of total foreign-exchange earnings of R449.83bn.
In addition, coal was the third-largest employer in the mining industry after precious metals and PGMs, directly employing 89,548 people, which represented 20.48pc of total mining industry employment. These employees received over R30.71bn in wages and salaries, which constituted just over 20.27pc of the mining industry's total wage income.
But the implementation of stricter environmental laws in South Africa will adversely affect the electricity sector, liquid fuels manufacturing, and the iron and steel industry, Mantashe warned. Together these three sectors account for more than 80pc of domestic coal demand in terms of value and around 70pc in volume, he said.
"For developing nations like South Africa, coal is a very affordable source of primary energy and abundantly available," Mantashe said.
But it faces several challenges, not least among them, increasing pressure from financial institutions and green energy advocates, as coal is a major contributor to GHG emissions, he said.
However, a pursuit of the Cop 26 agenda cannot afford to wholly ignore South Africa's national interests, the minister stressed. Instead, Cop 26 commitments should be integrated into national development plans "serving our interests as it is with all other states bargaining the global trajectory of climate change", he said.
