BUSINESS MAVERICK: CORONAVIRUS
Coal companies to supply Eskom, but NUM source says only from stockpiles
Eskom says coal deliveries to its power stations will continue during the lockdown. A source with the National Union of Mineworkers says this will only be stockpiles and that its only members who are going to work will be those required for ‘care and maintenance’ operations when the mines shut.
Everything right now is about as clear as a lump of coal, but the fossil fuel will continue to supply Eskom during the lockdown, according to the utility’s spokesman Sikonathi Mantshantsha.
“All electricity production value chains are critical and an essential service. We’re giving our suppliers documents to secure their ability to produce and deliver,” Mantshantsha told Business Maverick.
A source with the National Union of Mineworker (NUM) who asked not to be named said this only applied to keeping Eskom supplied with stockpiles and that none of its members were going underground or into pits.
“Our position is that no mineworkers are allowed to go underground during the shutdown except for care and maintenance employees who are considered essential,” the source said. President Cryil Ramaphosa in his address to the nation on Monday, 24 March said that mining companies “will be required to make arrangements for care and maintenance”.
“NUM members in the coal sector are confused, they are not sure if they will be classified as essential or not and they want to know from government if they can clarify that issue.”
Miners in South Africa do not have to go into an area if they consider it to be dangerous, with no fear of being hauled over the coals by HR. This policy has been in place to prevent accidents and one presumes it can almost certainly be applied in the case of this pandemic.
Eskom’s Mantshantsha said the utility had “adequate coal stockpiles. An average 50 day’s worth of supply” at each power station. Eskom almost ran out of coal 16 months ago and so restocked to maintain sustainable levels, with a requirement of at least 20 days. And with power demand certain to plummet, the company’s stockpiles will probably last longer than the current 50-day average in stockpiles.
Johan Theron, spokesman for Impala Platinum, said that it was “clear that mining operations will stop as announced, with smelting and refining to be placed on care and maintenance”.
Anglo American and its iron ore unit Kumba and platinum unit Amplats said in statements that: “Anglo American will review the detailed regulations relating to this action that are being published, including in relation to exemptions for certain business activities, and will issue a further statement in due course.”
“Anglo American’s priorities are the safety, health and well-being of our people and all those who interact with our business around the world. We recognise the critical role that our operations play in our host operating countries, including in terms of jobs and our local communities. We are therefore also working together with the government of South Africa to ensure the continuity of our business where appropriate in order to minimise any unintended consequences of the announced lockdown.”
So Anglo may be hoping for some exemptions but it seems likely those will only apply to employees engaged in care and maintenance. Given the company’s hugely improved health and safety record in recent years, it is hardly going to do anything reckless.
In a statement, the Minerals Council South Africa warned that marginal operations may never recover:
“The Minerals Council is engaging with senior government leadership over the detail of the lockdown where the industry is concerned. This will include the nature of essential services and what will be required in terms of care and maintenance for non-operating facilities. The Minerals Council is also exploring what will be required to prevent the lockdown leading to permanent damage of the industry. There are marginal and loss-making mines that would probably be unable to reopen should they be required to close fully, without remedial measures.
“In addition to the measures announced by President Ramaphosa last night, there are other creative solutions being explored, including by organised business as a whole, that could assist the survival and eventual recovery of the industry and the economy. The mining industry intends to be at the forefront of exploring these solutions, as we seek to ensure the long-term sustainability of our industry.”
According to Minerals Council data, the mining industry accounted for 8.1% of South Africa’s GDP in 2019, with a R360.9-billion contribution. Because commodity prices have effectively been in meltdown, it is impossible to estimate how many billions of rand will be lost to the lockdown. But a gaping hole will be left in the economy’s GDP, and tens of thousands of jobs which support hundreds of thousands of dependants may be at risk. BM