Page 7 - DMEA Week 28 2022

DMEA COMMENTARY DMEA

“primary focus” categories, he explained, LNG to the rest of the country. If you think about it,
can serve as a lower-carbon source of fuel than we’ve got access to the N1, the N3 and the N5
existing options. highways, all within almost equal distance. The
“There are three primary customer types,” ground is flat, there’s a lot of available land, and
he told CNBC Africa. “We’ve already signed up it’s relatively well priced … And [with LNG],
with [corporate] customers such as Consol and you’ve got a source of clean sustainable energy
Italtile, two blue-chip companies in South Africa in the area, which means that from an attrac-
who are weaning themselves off heavier-carbon tiveness perspective, you’ve got the labour force
fuels as well as using it as a source of energy secu- there as well, and highly skilled. You’re sitting in a
rity ... [These] are our industrial customers who position where strategically it makes more sense
are using it for thermal purposes. [Then] there to set up industrial operations and manufactur-
are other customers who want it as a source of ing operations in the Free State over, say, Jo’burg.
energy to get away from load-shedding, so [they] We really do see this project becoming over time
use it to power [their] generators, and it’s about a catalyst for the area.”
70% carbon reduction in relation to Eskom. He continued: “So the project itself? Yes, gas
So it’s a massive reduction in greenhouse gas doesn’t employ as many people as mining does.
[GHG] relative to Eskom’s power, and it’s signifi- But we believe we will leave a much longer-last-
cantly cheaper as well. And then the third pillar is ing legacy in the area than the mining houses
in transport. [For] heavy trucks, it’s significantly will.”
cheaper than running your trucks on diesel, and
it’s the quickest way to get significant ESG cred- Could power crisis boost LNG?
its because of the significant reduction in green- In the meantime, though, Renergen may also
house gas [GHG] emissions relative to diesel in have a chance to have a significant impact in the
these trucks.” short term.
Marani also highlighted Renergen’s plan to Marani did not talk much about what role
make South Africa a key player in the global his company might play in South Africa’s cur-
helium market over the long term, saying that rent energy markets. He did note briefly that
the new plant would be exporting all of its liq- Renergen expected companies needing fuel
uid helium production. He drew attention to for generators that would allow them to avoid
the fact that helium shortages had contributed load-shedding to be one of its three main groups
to supply chain disruptions over the past two of LNG buyers. However, he did not address the
years, explaining that the gas was used in sem- possibility that the number of such companies
iconductor and microchip manufacturing, and – and the level of interest in LNG-fuelled gener-
also noted that helium was used as a propellant ators – is likely to rise in the near term.
in rocket launches. South Africa’s energy sector has been in a
sub-optimal state for more than a decade. Cus-
Economic potential tomers of Eskom, the national power provider,
He also talked up the potential of the LNG plant have come to expect blackouts and load-shed-
to fuel job creation and economic growth in Free ding as a regular feature of service. However,
State. conditions have grown even worse over the last
While Renergen will probably not hire more few weeks, with plant breakdowns and strikes
than 75 people for Phase 1 operations, rising to taking some 18,000 MW of generating capacity
150-160 people during Phase 2 operations, he offline. President Cyril Ramaphosa said on July
said, there will be knock-on effects. By making 11 that his government would take action to mit-
a relatively low-carbon source of energy availa- igate the shortages soon, but it remains to be seen
ble to customers in a part of South Africa with whether conditions actually improve.
low-priced real estate and good access to key If they do not, Renergen may find that news
transportation routes, the project could serve as of its Phase 1 launch generates more interest in
a trigger for further growth. LNG and LNG-fuelled generators than it might
“[It’s] not like a traditional mining company, ever have expected in the short term. In turn, if
where the mining company becomes the bread- interest in LNG remains strong, Renergen may
basket for the area and the sole employer. This want to consider ramping up the scale of Phase 2
is a catalyst,” he explained. “This is a situation so that it can serve more customers within South
where you have to look at the Free State relative Africa.™

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