• Tuesday, March 05, 2024
businessday logo

BusinessDay

Nigeria: Coal industry on the brink of collapse

coal-exports

Coal which used to be a major source of energy in the country before the discovery of oil is gradually on the brink of collapse.

Coal is a major player in the world’s energy mix and arguably the most important fuel in the global energy mix and the second most consumed.

Despite the environmental issues that it has and that will continue to raise issues, it still makes 30.3 percent of the global primary energy needs and is used to generate over 42 percent of the world’s electricity.

“There are no coal power plants operating in the country currently because there were factors to consider in designing and running them. For you to be able to build a coal power plant you must determine the amount of coal deposit you have and how many years it can last,” the Minister of Mines and Steel Development, Musa Sada, told the News Agency of Nigeria (NAN).

The Nigeria coal industry has four closed non-optional mines in Okpara and Onyeama in Enugu State, Okaba surface in Kogi State and Owukpa underground in Benue State.

In addition to these there are about 13 undeveloped Coal fields.

Some industrialists and electricity generating companies in the country are already initiating moves to import coal from South Africa as a proactive measure against the lingering power crisis in the country.

The move is believed to be as a result of the frustrations the operators experience in getting gas to fuel their respective power plants, according to experts.

Dangote Cement Plc is leading the coal import initiative from South Africa as the company has placed an initial order of 30,000 tonnes of the commodity from the continent’s second largest economy.

The company has already slated $250 million for power generating conversion, which would involve the establishment of three plants at Dangote Cement’s facilities at Obajana in Kogi State; Gboko in Benue State; and Ibeshe in Ogun State.

Economic Impact of Coal

In the recently released GDP report by the National Bureau of Statistics (NBS), coal mining in the second quarter was 2,066.07 showing a 0.2 percent increase when compared to the quarter one figure.

Even though Nigerian coal is currently in high demand in the international market on account of its low sulphur and moderate ash content, it is still in low supply, leading to the loss of $1 billion annually, information from the Nigerian Bureau of Statistics (NBS) revealed.

The loss is attributed to abandoned coal mines and lack of necessary and modern infrastructure needed to drive the long-neglected sector, which has the export capacity or potentials of 15 million tonnes per annum.

Coal provides electricity around the world. Its demand worldwide has almost doubled. China’s demand for coal increased almost five fold between 1980 and 2010, with China now accounting for almost half of global coal consumption.

Coal production can be used to boost employment, particularly in the rural areas where coal is found. The mining sector can easily be the largest employment since the deposits abound virtually in every state of the federation.

Despite these qualities this sector has been left unexploited especially after oil was discovered in commercial quantity in Nigeria, and the country became over-dependent on it as its primary source of energy.

Electricity a major market for coal

In countries like USA, China, India and South Africa coal are their primary source of electricity and it has sustained their economy.

Nigeria has experienced and is still experiencing severe power outage. This has increased the cost of production and caused many businesses to close down.

“The recent dip in power supply has been due mainly to inadequate gas supply to thermal power plants,” said the Minister of Power, Chinedu Nebo.

Industrial Machines are constantly damaged by power outages and many businesses have resorted to the acquisition of standby generators which has further increased their operating cost thus slowing down the growth of the economy.

Coal can be considered an alternative to power generation in the country. It is found in large proven quantity so it is easily available.

Due to its high heat content, it is easily transformed into electricity.

The cost of production is quite attractive and it is also relatively cheaper than other options.

In the world today coal is used to generate electricity to power businesses. Its power plants that run on coal produce steam that turns turbines to generate electricity.