The South African coal mining sector is still a “vibrant and indispensable” component of the energy and raw material supply chain, owing to coal continuing to play a major role in the country’s economy. Coal accounts for about 80% of South Africa’s electricity mix, contributing to GDP and creating employment opportunities, says diversified minerals and energy company Menar chief commercial officer Ruan Nothnagel.

The coal sector has proven resilient, even amid logistical challenges and pushback because of green energy transition policies in recent years.

“There is still strong demand for South Africa’s coal, and more so coal from Menar’s companies – Canyon Coal and Kangra, owing to its good quality and our proven track record of reliable supply,” he adds.

Nothnagel notes that the ongoing strength of the coal sector is attributed to the significant improvement in State-owned logistics group Transnet Freight Rail’s (TFR’s) railed volumes to the Richards Bay Coal Terminal (RBCT) in 2025 – a trend that is expected to continue into 2026.

“The general view in the industry appears to be that TFR will perform at an average tempo of 63.5-million tonnes a year delivered to RBCT by the end of this calendar year.

“For the first two weeks of January, TFR has already reported performing at a tempo of around 65-million tonnes a year – so we are off to a good start.”

Smaller and non-RBCT export rail and port volumes through Maputo, in Mozambique, and the Richards Bay multi-purpose and dry bulk terminals for thermal coal are “down drastically, owing to their higher relative cost to RBCT”, Nothnagel elaborates.

He states that they do not anticipate any notable thermal coal shipments from Mpumalanga-sourced coal to those ports in 2026, despite the forward coal prices being in contango, particularly considering TFR’s enhanced performance at RBCT.

Coal Demand Concerns

Nothnagel says a major concern for the coal industry this year is the security of supply to State-owned power utility Eskom.

Eskom reportedly has about 5 GW of excess power generation capacity, which he attributes to decreased demand for electricity from industry, and which was inversely caused by many major and high energy-intensity factories shutting down primarily because of the high electricity prices.

The ferrochrome smelters, if all the installed capacity were to be in operation simultaneously, would account for up to 3 GW of baseload generation capacity.

“This means that coal suppliers to Eskom are being asked by the utility to reduce their coal supply volumes, and in many cases are being throttled down on their supplied volumes,” says Nothnagel, adding that “to put this into perspective, 5 GW of coal-fired power generation would account for about 20-million tonnes a year of coal burn”.

If South African ferromanganese smelters do not restart, up to 12-million tonnes a year of coal for Eskom would have to be discontinued, as there is no logistics capacity to export this additional volume and no other domestic demand.

This would result in thousands of miners losing their jobs, along with the indirect jobs created to support “South Africa’s most key sector”, he elaborates.

Consequently, the industrial, coal mining and anthracite mining sectors are “keeping a close eye” on Glencore’s and Samancor’s memorandum of understanding with Eskom – signed December 8, 2025 – which sets out a February 28 deadline for a deal to be reached, whereby those ferrochrome smelters can receive reasonably priced electricity in order to restart beneficiation.

Meanwhile, global commodity markets are expected to remain largely unpredictable and volatile going into 2026, owing to geopolitical disruptions and US politics, making price predictions uncertain, he says.

Industrialisation Involvement

Menar wants to become more actively involved in a broad industrialisation drive in South Africa, says Nothnagel.

A key focus of the company in this regard is its acquisition of the Khwelamet manganese alloys smelter, in Gauteng, from chrome ore miner and smelter Samancor, through its joint venture with private investment firm Ntiso.

“Once fully operational, Khwelamet will produce high-quality ferromanganese, revive lost capacity and, hopefully, redirect job opportunities to South African shores,” he avers, adding that “it does not make sense” for South Africa to export most of its raw manganese, to be beneficiated in China, resulting in job creation on foreign shores rather than locally.

“Menar also has other mining, beneficiation and processing projects in the pipeline, at different stages of development, which it will advance as soon as market conditions improve,” concludes Nothnagel.