Operator of the controversial Aberpergwm mine, Energybuild, will continue to supply Tata Steel in Port Talbot under the direction of the Welsh Government, as it tries to move away from fossil fuel hydrocarbon production.
Speaking to BusinessLive Wales, Energybuild, which mines the anthracite (hard coal) at Aberpergwm near Glynneath, said that it is trying to pivot the business to become less carbon intensive as it phases out hydrocarbon production and turns to non-thermal industries.
But it will continue to supply its anthracite to Tata Steel in Port Talbot following conversations with the Welsh Government.
Sales manager at Energybuild, Steve Williams said: “There are all sorts of industry problems that aren’t just immediately solvable for the UK. Tata Steel in Port Talbot is the last remaining high-quality steelmaker in the UK, to do away with it would leave the UK vulnerable because you’d be completely dependent on foreign imports of steel.”
Where does Energybuild sell its Aberpergwm coal?
The company supplied 27% of its anthracite to Tata Steel last year — making 20% of the company's total revenue.
Energybuild has been at the centre of the controversy surrounding the Aberpergwm mine and political tensions between the Welsh and UK governments.
The mining operator secured planning permission in September 2018 from Neath Port Talbot Council as part of its application for an expanded mining licence at the colliery.
The new licence was approved by the Coal Authority in January, but there had been an on-going row for many months before the licence’s approval between Whitehall and Cardiff Bay as to which body had the authority to block the licence application.
Last month, the Coal Authority insisted that the mining licence could have been blocked by the Welsh Government under the Wales Act 2017.
The Welsh Government refuted this, claiming that, based on its legal advice, any determination it made on the application would have had no legal bearing.
The Welsh Government has expressed strong opposition to the new mining licence, particularly in light of its climate change emergency announcement in 2019.
However, since the controversy the Welsh Government has begun to engage directly with Energybuild to discuss how the mining operator can move away from fossil fuel hydrocarbon production.
Mr Williams said: “We’re not the villains that we’re being made out to be. We have a major strategy of extending capital expenditure to take us out of thermal activities. We feel that we should at least have a fair chance to move our products out of these markets.”
He added: “We want the Welsh Government’s support and I think we’re getting that support now. They understand what we’re attempting to do or will do by transitioning away from heating uses of our anthracite.”
But what about the further 40 million tonnes of anthracite, cited in numerous reports, that would be mined as a result of the new licence?
According to Mr Williams the figure is largely inflated. “We couldn’t mine 40 million tonnes if we were on the planet for another 200 years,” he said.
Energybuild plans to mine between 200,000-250,000 tonnes of anthracite each year at Aberpergwm over the next 20 years.
“We don’t expect linear production due to the mine geology, but we expect our average to be 200,000 to 250,000 per annum,” said Mr Williams.
That would equate to between four to five million tonnes of anthracite mined in total over the next 20 years, with the new licence covering the reserves at the perimeter of the original licence.
Energybuild still has the ability to mine on its existing licence which will see production over the next 10 years at a current extraction rate average around 100,000 tonnes a year.
The company’s target for this year is to mine 186,000 tonnes of anthracite.
Energybuild aims to supply 70% of its anthracite to non-thermal industries over the next two years.
That means 30% of coal will still be sold as fuel in hydrocarbon production.
This doesn’t only include Tata Steel. Energybuild also supplies the stainless steel works in Sheffield and, surprisingly, is a major supplier to commercial greenhouses in the Netherlands and Germany.
The coal mined at Aberpergwm is used to heat the industrial greenhouses that farm fruits and vegetables.
“These are places where gas is overwhelmingly expensive and they need it for heating the greenhouses,” said Mr Williams. “We will move out of that market over the next two to three years.”
The company also sells its anthracite into the domestic fuel market across the UK, Ireland and Europe.
There is still a significant demand for coal for domestic heating in households said Mr Williams, especially in rural areas and particularly in Wales.
He estimates that at least 50,000 homes would be short of a source of fuel for their boilers if Energybuild ceased supplying that market.
“There are a lot of places where gas still doesn’t get to and we can’t just get out of those markets,” he said.
“The people that have boilers that use our anthracite for central heating are generally either low income or elderly households. We have a responsibility to keep supplying those households.”
The company has discussed this with the Welsh Government who, Mr Williams said, have accepted the need to continue supplying domestic fuel until these households can be helped to move away from coal boilers.
“We’re still quite dependent on these fossil fuels as a country. Gas still produces 50% of the power in the UK. We need proper plans, strategies and forecasts for what fossil fuels we do need in the period we can transition,” he said.
Energybuild currently employs 160 workers at Aberpergwm and this is expected to increase to 200 over the next few years.
Those non-thermal industries that Energybuild is trying to transition to are made up of different chemical processes.
The company supplies its anthracite to EnviroWales which uses it to recycle the lead out of batteries and this year it will become the dominant supplier of colour into brickworks.
High-grade anthracite is also used in carbon filtration systems for water purification.
Energybuild has already built a plant to make anthracite filter media to sell to water treatment companies in the UK and Europe. Mr Williams expects this to become a much bigger part of the business over the next three to four years.
“All tap water is purified or filtered through dual sand and anthracite filters. We are now the only producer of anthracite for that purpose in Western Europe,” he said.
The mining operator has also started supplying into the activated carbon industry to a Norwegian company called Elkem for the production of carbon electrodes which is used in many chemical processes including electric arc furnaces and battery manufacture.
But the carbon from anthracite has to go somewhere, even in these non-thermal industries, and Mr Williams acknowledges this.
“There will be some carbon dioxide given off, but these processes have no other alternatives,” he said. “In brick manufacture and battery recycling there will be some CO2 emissions.”
“In lead battery recycling, the anthracite is used as a reductant to clean up the contaminated lead. In carbon electrodes, it remains as anthracite although it is put through a process which electrically calcines it to make it into a carbon electrode.”
Will the conflict in Ukraine affect coal supply?
Current events involving Russia’s invasion of Ukraine has brought in a political argument for the need to keep Aberpergwm continuing to mine anthracite.
“The biggest supplier to Tata for anthracite, outside of us, is Russia,” said Mr Williams.
Do they see the conflict in Ukraine impacting their short term orders, especially if Russian coal exports are sanctioned and limited into Europe?
At the moment, Energybuild is inundated with enquiries from all over Europe and Northern Africa. The company has had huge volumes offered to it, however it is already well sold out for this year said Mr Williams, and has limited capacity to take on more sales volumes.
He said: “Our strategy is still to develop into specialist industrial markets and we don’t wish to divert from this strategy. While there are lots of short term opportunities, we are firmly sticking to the customers who have supported us and those we wish to have a long term relationship with in industrial, non-thermal applications.”
