South Africa's natural resources

Official Name: Republic of South Africa.

Summary: South Africa has an abundant supply of natural resources and relies mainly on its coal-mining industry for energy. Well-developed energy sectors exist, and the country is integrated into the Southern African Power Pool (SAPP).

The economy of the early inhabitants of South Africa was dominated by subsistence farming and hunting. Agriculture intensified with the arrival of the first European settlers in the 15th century. The later discovery of diamonds in the Northern Cape Province in 1866 and the discovery of gold thereafter transformed the economy and attracted considerable foreign interest. The diamond and gold rushes led to mining, which resulted in the rapid development of South Africa in the 1930s and 1940s. Among these precious minerals, other mineral deposits, such as platinum, base metals, and coal, were found. Soon, agriculture diminished in importance, mining and industry grew, and apartheid (racial division) was implemented. Apartheid sparked international uproar but intensified between the late 1970s and early 1980s, resulting in various campaigns for trade sanctions, including oil embargoes and disinvestment against South Africa. Coal became increasingly important as the sanctions continued; their imposition both directly and indirectly influenced the demise of the apartheid regime by adding immense economic pressure. Sanctions were lifted in 1993, and South Africa’s 46-year policy of apartheid ended with the general elections in April 1994. The economy has grown rapidly since the end of the apartheid era and is now one of the most developed economies in sub-Saharan Africa, but daunting economic problems still remain.

The mining industry remains a vital part of South Africa’s energy sector and economy, as well as its biggest employer. South Africa had extensive recoverable proven coal reserves in 2022, estimated to total 9.983 billion metric tons. South Africa’s coals are predominantly bituminous thermal grade, but as much as 25 percent of total reserves are high in ash content. Beneficiation is therefore critical for export-quality coal. Low-quality coal is used for local power generation, often leading to load losses at power plants. One of the country's largest exports in 2022, most of South Africa's coal was sent to European and Asian Pacific destinations, especially India. KwaZulu-Natal harbors one of the world’s largest coal export terminals in Richards Bay, a key passage for export.

Aside from being a significant coal consumer and exporter, South Africa depends heavily on oil imports. In addition, the synthetic fuels industry has vastly developed, producing gasoline and diesel fuels from coal and natural gas.

Production and Consumption

South Africa was ranked 18th in the world for its electricity production in 2022, and it consumed 200.565 billion kilowatt hours the same year. This consumption has grown rapidly since 1980, and the production is mainly coal-fired and largely under the control of the state power supplier Eskom, which also depends on a nuclear power plant, hydropower, and open-cycle gas turbine stations when demand is high. Until the early twenty-first century, South Africa was able to supply the lowest electricity prices in the world at an average of only 0.025 euro or less per kilowatt-hour, but toward the end of 2007, South Africa encountered problems meeting the high demand because of insufficient power station capacity. Scheduled and emergency load shedding (rolling blackouts) and power cuts were enforced throughout the country. This was stopped in May 2008, but blackouts returned in the mid-2010s due to ongoing supply constraints. To mitigate any future electricity deficits, Eskom encouraged the country to conserve electricity and aimed to develop renewable energy sources by constructing a 100-megawatt concentrating solar power plant and a 100-megawatt wind power farm. Still, the affordability of electricity in South Africa remains a pressing problem. In addition to rising prices, the country also struggles with the fact that its electricity consumption structure and spending are skewed towards higher-income portions of the population.

South Africa produces only a small amount of oil, much less than it consumes, with a production of 95,000 barrels per day in 2023 and proven reserves of about 15 million barrels in 2021. The country has the second-largest oil refinery system in Africa but imports the majority of its crude oil from members of the Organization of Petroleum Exporting Countries (OPEC), including Saudi Arabia, Iran, Nigeria, and Angola.

South Africa’s synthetic fuels (synfuel) industry converts coal and natural gas into liquid fuels. The Petroleum, Oil, and Gas Corporation of South Africa (PetroSA) and Sasol are the major companies involved in this industry. PetroSA, a pioneer in gas-to-liquids (GTL) technology, owns and operates the world’s largest commercial GTL refineries. GTL technology generates "clean" fuels via an environmentally friendly process. Sasol, an integrated energy and chemicals company, operates the world’s only commercial coal-to-liquids synthetic fuel facility. More than a third of the liquid fuel requirements in South Africa are met by synthetic fuels.

South Africa yields only small amounts of natural gas, which has little impact on its electricity sector. Natural gas is also imported from neighboring Mozambique and Namibia and is used in synthetic fuel production; the South African government intends to increase these imports and expand domestic production. This could reduce the need for coal and lessen the high carbon emissions and intensity resulting from its consumption.

Nuclear power accounted for about 4.4 percent of South Africa's total installed electricity capacity in 2023. The South African nuclear industry began during the 1940s. The 1960s saw collaboration with the US Atoms for Peace program. In 1970, the Uranium Enrichment Corporation (UCOR) was established to facilitate the initiation of an extensive nuclear fuel cycle program. Uranium exploration in South Africa was pursued in addition to the exploration for gold. These efforts were intensified by the 1970s oil crisis but persisted because, with the main coal reserves concentrated in the northeast of the country, transporting coal over long distances was ineffective. In 1984, operation of the nation's first commercial nuclear power reactor, owned by Eskom, began in Koeberg, near Cape Town.

The government is strongly committed to the future of nuclear energy, but financial constraints definitely hinder progress. South Africa is the only country to have developed nuclear weapons and voluntarily dismantled them prior to becoming a party to the Nuclear Non-Proliferation Treaty. The nuclear weapons program, which began around 1970, had produced a nuclear device by the end of the decade; the weapons program was later abolished. South Africa is also a member of the Nuclear Suppliers’ Group, reiterating its opposition to nuclear proliferation.

Bibliography

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