Africa’s accelerated energy transition should leave no-one behind 

Left to right, Dawie Scholz, Principal, Boston Consulting Group, Werner Duvenhage, MD – Richards Bay Minerals, Rio Tinto, Kgabi Masia, MD Minerals, Exxaro Resources, Tshokolo Nchocho, CEO, Industrial Development Corporation of South Africa (IDC) Demetrios Papathanasiou, Global Director – Energy and Extractives Global Practice ,World Bank, Vanessa Ushie, Acting Director, ANRC , Africa Development Bank, Natascha Viljoen, CEO, Anglo Platinum. Credit: Henry Lazenby.

As the world pivots towards a green energy transition in the fight against climate change, Africa faces a generational opportunity to create new supply chains drawing upon its ‘Aladdin’s cave’- like endowment of mineral wealth, a keynote panel at the African Mining Indaba heard on Tuesday. 

The emerging message is that while the transition forces the creation of new industries and value chains, those enrolled in the legacy mining operations such as thermal coal should not be left behind.  

While it will take the formation of meaningful public-private partnerships to drive change, key industry leaders sketched a push-pull scenario in which the industry leads innovation and must train workers to fill high-tech jobs. 

Anglo American Platinum (JSE: AMS) CEO Natascha Viljoen said the company’s recent milestone achievement of unveiling a prototype of the world’s largest hydrogen-powered mine haul truck, designed to operate in everyday mining conditions at its Mogalakwena PGMs mine in South Africa was an apt demonstration of how the private sector was driving positive change. 

However, she was quick to note that this was but the start of a much larger initiative to decarbonize the company’s global mining operations and create a vertically integrated value chain. 

“The reality is that haul trucks account for about 20% of our greenhouse gases. We’ve got 400 of these across our company. It’s important for us to convert them to using hydrogen,” she told the audience. 

“Ultimately, it will take the equivalent of 500,000 light vehicles off the road. But of course, that would only be possible if we can make green hydrogen and fill it with a green energy source,” she said. 

For this reason, Anglo American is focused on creating a renewable ecosystem for South Africa that can generate between three and five gigawatts of green energy that would allow the company to be carbon neutral by 2040. This green energy would also become the catalyst for producing green hydrogen for its burgeoning fleet of mine trucks. 

“Our objectives entail a combination of photovoltaic, wind, and hydro-pumped storage. It sees us embarking on using the extensive natural resources that we have across the country and how we then generate our renewables. Ultimately it will help us step off the grid, relieving the power grid from some pressure because we are a high-intensity electricity user,” she said. 

Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) MD for Richards Bay Minerals, Werner Duvenhage, underscored how collaboration between the private and public sectors was critically essential to accelerate the energy transition.  

“First of all, collaboration, like we’re already seeing through the Minerals Council of South Africa, Business Unity South Africa, and the Energy Intensive Users Group, are important means to coordinate these efforts,” he said. 

“Secondly, regarding infrastructure, the burning question is whether one can actually take power from where we will generate it? And thirdly, the speed of implementation depends primarily on de-bottlenecking the regulatory part of it, which we know the South African president is already addressing,” he said. 

In the view of the African Development Bank’s acting director, Dr. Vanessa Ushie, cooperation on a regional scale is critically important to unlock the region’s mineral wealth and beneficiation potential. 

“From our perspective, it’s about how African countries can be brought together to cooperate – whether it’s on beneficiation or on creating electric vehicle value chains. We should ensure that local value is retained in Africa, and we’re not just supplying raw materials. We need to move beyond that,” she said. 

Leave no-one behind 

Dr. Ushie would like to see a deepening of regional networks and platforms to leverage the continental free trade area to create resilience in the new supply chains. 

“The issues of a just energy transition relate to what happens to coal assets and the coal miners and communities affected by climate change? We talk about stranded assets often, but it’s the people that could be stranded, leading to the creation of ghost towns and countries simply because they’re not prepared for the future. We need to build resilience towards this unfolding change,” she said. 

Dr. Ushie also pointed out that the energy transition hinges around finding new and innovative ways to mobilize finance for the private sector to come into the green energy transition.  

The World Bank’s global director for its energy and extractives global practice, Demetrios Papathanasiou, pointed out that Africa had the unique opportunity to, in many instances, develop new industries bypassing the fossil-fuel burning stage many of today’s developed nations relied on to reach economic maturity. 

“Moving the energy transition forward, getting to net-zero as quickly as possible is imperative to avoid the effects of climate change that could be devastating to the continent. We have an enormous challenge.  

“The solution is to find more ways to collaborate between the government, the private sector, and the financiers. I think this sense of urgency that we’re facing a common challenge is not about working against each other, but trying to work with each other,” he said.  

The panel also heard from the CEO of South Africa’s Industrial Development Corporation, Tshokolo Nchocho, who stressed businesses had to adapt or die. 

“If there’s not enough adaptation on the part of businesses embracing just transitions, they will die. I think it’s as simple as that,” he said. 

In tandem, Nchocho stressed that the industry should not miss the industrial development opportunities with the energy transition. “This is not just about redefining or redesigning energy systems. It’s much broader than that. There are opportunities to work in agriculture and various other sectors where green energy can be brought to bear.  

“We should also not forget the human face of this entire change process,” he said. “We cannot afford a situation where businesses changed in the transition while massive amounts of people are left destitute.” 

This is a sentiment South Africa’s Exxaro Resources’ (JSE: EXX; US-OTC: EXXAY) MD for minerals, Kgabi Masia, shares. Exxaro has significant thermal coal operations in South Africa’s Mpumalanga province, with the industry directly employing more than 100,000 people.  

“It is critical that we don’t leave anyone behind. The impact catalyst will remain to diversify Exxaro’s business,” he said. “We are dealing with questions about transitioning our land post-mining. We empower emerging farmers and partner with them in agricultural activities to ensure they are successful.”