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A global report released on Tuesday says recent changes in South Africa's energy sector have placed the future of coal at a "crossroads".
However, demand is expected to be stable for the next five years, supported by the Chinese market, which accounts for around half of global consumption.
The 2019 Coal Report by the International Energy Agency (IEA) said although the government's Integrated Resource Plan, released earlier this year, had brought "broad clarity" for the future country's energy sector, there were still uncertainties over the coal industry.
"These include the financial difficulties of electricity utility Eskom, changes in coal mine ownership, and the shift away from Mpumalanga, the county's coal-mining heartland, to other areas," said the report.
It added that demand, production and exports were expected to remain stable through 2024.
Coal, but cleaner
Speaking at the launch of the report, Mineral Resources Minister Gwede Mantashe said coal was still still part of South Africa's energy mix, with an emphasis on "cleaner technologies".
"Coal faces pressure from a number of areas, including access to funding for coal projects, decommissioning of ageing power plants, and key trading partners aiming for coal sovereignty," said Mantashe.
"We are of the firm view that the country's transition to cleaner sources of energy should be systematic, and done in a manner that is mindful of social, economic as well as environmental considerations."
Mantashe has recently come under pressure from the opposition Democratic Alliance to sign agreements allowing municipalities to procure power directly from independent producers.
That call intensified following the recent round of load shedding by Eskom, as the power utility battled to meet demand due to system failures at power plants.
In response to the crisis, Mantashe's department announced a number of short- and medium-term interventions to meet South Africa’s energy demands and address its electricity and energy challenges, including steps to allow IPPs to come on stream sooner.
The first IPPs from bid window 4 - originally scheduled for 2023 - will hopefully come online by mid-2020, Mantashe said.
Coal transition could take decades
Director of Energy Markets and Security at IEA, Keisuke Sadamori, warned that the transition from coal would not happen overnight and could take decades, as history had shown.
However, the report also stated that conditions for coal mines were becoming more challenging, with financial institutions tightening conditions for funding of coal operations.
In South Africa, Nedbank and Standard Bank have announced they will no longer finance coal projects.
