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A steward for change – from within the belly of the c...

Business Maverick

Business Maverick

A steward for change – from within the belly of the coal beast

Lerato Khumalo. (Photo: Supplied)

Dr Lerato Khumalo, the recently elected vice-chair of the Industry Task Team on Climate Change (ITTCC), saw a gap in the market for professionals with expertise in the environmental management and sustainability space and made it her mission to make a difference. She has her work cut out for her.

First published in the Daily Maverick 168 weekly newspaper.

As a child, Khumalo’s parents had high hopes that she would make them proud as a medical doctor. But her mind became preoccupied with stories of gigantic oil spills that pollute coastlines and suffocate sea life, and the deforestation of the Amazon.

“I changed my mind about medicine … I was interested in the environment and the impact that things like deforestation were having on the world.”

Today, Khumalo is the air quality and climate change specialist at Exxaro and vice-chair of the ITTCC. It’s a voluntary, non-profit association that comprises several local energy-intensive companies across different business sectors, including Exxaro, Sasol and Anglo American, which are working together to reduce South Africa’s carbon footprint.

Talk about being in the hot seat. Exxaro is the biggest coal supplier to Eskom, and one of the biggest coal companies in SA. It operates in an industry that employs 80,000 people, many of whom are unskilled and semi-skilled, while South Africa’s integrated resource plan has set the country on a path to decommissioning all or most of our coal-fired power stations by 2050. How the company is going to adjust to a low-carbon economy is a subject of considerable interest not just to its own employees, but to its investors.

“They want to know how we plan to manage our risk and mitigate and adapt our business exposure to climate change while harnessing the opportunities presented by the transition to low-carbon economy,” Khumalo says. “It’s critical to mention that we see ourselves as part of the solution – from a national and global perspective.”

She says: “I am interested in the role that technology and innovation can play in solving our problems. It is not a silver bullet, but can technology make a difference in the sustainability space?” It was this curiosity that led her to further her studies and she recently completed a PhD in chemical technology at the University of Pretoria, focusing on the characterisation of atmospheric pollutants found in areas near opencast coal mining and other industrial activities.

Exxaro’s sustainability journey began before 2010 when coal exports to Europe, a former significant thermal coal customer, started to decline. This encouraged the firm’s R1.5-billion investment in Cennergi, in partnership with Tata Power, to develop two wind farms in the Eastern Cape. Today Cennergi is wholly owned by Exxaro and the wind farms deliver 239 megawatts of reliable and clean power to the national grid.

In March 2020, the company published its climate change position statement, stating that it would not seek further growth opportunities in thermal coal. But in the immediate term, its revenue will be largely generated from its remaining coal operations as it continues to supply Eskom in terms of existing coal supply agreements. “We must provide clean coal and avoid stranded assets while we diversify our portfolio. We want to grow our renewable energy business and invest in other lowcarbon businesses,” Khumalo says.

Research done by Exxaro suggests that if it does not act to mitigate the risk of climate change, its coal business operating expenditure will be exposed to carbon price risk in the range of 5% to 8% by 2050 under the high carbon price scenario. “Our determination to become carbon neutral by 2050 will mitigate this risk.”

“We have had a number of social dialogues with our employees because it is critical to bring them with us as we invest in other industries.”

In Lephalale in the Waterberg Exxaro is involved in a number of projects to reskill, upskill and redeploy employees. These involve solar programmes to make houses “green”, forestry and reforestation initiatives, game farming and land management initiatives and agri-initiatives.

These may sound like ironic words, coming as they do from a coal company executive, but as Khumalo points out, it’s never too late for education.

Of course, climate change does not just affect Exxaro and its communities. A report published by groundWork notes that the phase-out of coal locally and globally implies the end of the export market and the phase-out of industrial and metallurgical coal, and of Sasol’s coal-to-liquid process as well as of steam coal used in power stations. It is unlikely, the report says, that there will be a smooth and orderly phasing down. Rather, mines will be shuttered or abandoned piecemeal as companies go bankrupt or abscond.

“Everything is about stakeholders,” says Khumalo. “A just transition must involve society as a whole. It cannot discriminate against certain sectors in society, especially the economically disadvantaged – we cannot increase their burden, which is disproportionate.”

What is required she says, are coherent policies – environmental, energy, labour – that all pull in the same direction. “We are in a new and difficult environment. In the growing spaces of renewable energy and hydrogen, we are not supported by well-developed policies that will ensure our transition to a climate-resilient and low-carbon economy.”

As important, she adds, is a coherent strategy on how South Africa will finance the just transition and ensure sustainable livelihoods, and that no one is left behind.

“This is a space where business must be proactive. We need to escalate our efforts further. We must contribute to the Paris Agreement. We all need to play a role.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.

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