Glencore to exit SA coal mining in as little as 15 years as sets out carbon reduction target

 GLENCORE will allow its coal reserves to deplete in order to meet its scope 3 targets which is to reduce greenhouse gas emissions by 30% by 2035.

What this means from a South African perspective is that the Swiss-based miner and trader will exit the country’s coal sector in as little as 15 years – the stated length of mineable reserves left in its portfolio.

“We are using everything we’ve got,” said Glencore CEO, Ivan Glasenberg when asked in a media conference call for details as to whether it would sell resources not currently under its economic plan.

South Africa’s Integrated Resource Plan (IRP) 2019, a blueprint on how the country will source its future energy supply, has cut back on the overall contribution of coal-fired power but it nonetheless says 43% of installed power-generating capacity will be from coal by about 2030.

The departure of Glencore from South Africa’s coal sector, albeit long-dated, still underlines the lack of major balance sheet in the sector following the planned exit of South32, which is selling its thermal coal to Seriti Resources. Anglo American is also said it will review how it would exit thermal coal in the country.

In the short-term, however, coal was crucial to economic growth, said Glasenberg. In comments to the firm’s annual results, he said: “We also believe that high quality coal will continue to be a part of the overall energy mix well into the future.”

Whilst coal’s share of primary energy demand was expected to fall by 2030 to 24% of world total from 27% in 2018, it was critical to for “… affordable and stable base-load power generation”, and would underpin coal demand growth, he said.

Asked whether Glencore would consider renegotiating its thermal coal contracts with Eskom, the power utility, Glasenberg said the company had a number of long-term coal contracts that were in favour of the utility.

“We have some long term contracts with Eskom some of which are onerous. We also have some coal sold at spot prices. So there are various different contracts with Eskom over the years. But we won’t renegotiate because some of our long-term contracts are favourable to Eskom,” he said.

Glasenberg declined to comment on the firm’s view of the power situation in South Africa which has continued to deteriorate. Eskom has regularly installed stage one and stage two load-shedding this year in order to get on top of its maintenance backlog.

And whilst South African president, Cyril Ramaphosa, committed the government to the speedy liberalisation of the energy sector – he said earlier this month that municipalities would be permitted to buy power from independent sources – Eskom continues to be a source of concern to the economy.