How policy can shape Mpumalanga's green industrialisation transition - Thomas Garner

Last week’s column examined the study titled “South Africa’s Energy Sector Investment Requirements to Achieve Energy Security and Net Zero Goals by 2050”. The work provides a quantified pathway to a secure and least-cost electricity system that can be financed at scale if policy aligns with timely project execution. The study confirms that the least-cost mix through 2030 and 2040 is a high-renewables system supported by flexible generation and batteries, with a spend profile that front-loads grid investment and build-out capital, and then reduces operating costs as the system matures.

A central question is how the Green Industrialisation (GI) scenario will affect Mpumalanga, the heart of South Africa’s coal mining and coal power generation economy. To answer this, the University of Pretoria completed a Computable General Equilibrium (CGE) modelling exercise to assess macro-economic implications. In parallel, the University of Cape Town undertook a detailed micro-economic study of the coal value chain, which is overwhelmingly concentrated in Mpumalanga.

The purpose of this work is to identify policy interventions that can mitigate the negative effects of the transition. The CGE analysis finds a long-run “double dividend” under the GI pathway. GDP growth improves relative to the baseline and environmental outcomes strengthen. The study concludes that delaying the transition raises socio-economic costs through increased health burdens, exposure to carbon border adjustment mechanisms and higher operating costs for an ageing coal fleet. The micro study confirms the concentration of risk.

Of the 76 406 direct coal jobs nationally, about 87 percent are in Mpumalanga, while power stations employ 30 481 workers. Workers in the coal value chain tend to be young, male and semi-skilled. The study segments the workforce into three groups. The minimal-challenge group consists of higher-skilled and professional roles and accounts for 17 203 workers (26 percent). The intermediate-challenge group consists of semi-skilled workers with reasonable redeployment prospects and accounts for 44 142 workers (67 percent). The core-challenge group consists of the lowest-skilled workers who are most at risk without structured retraining and accounts for 4 754 workers (7 percent).

The CGE results show divergent provincial paths. Without targeted interventions, Mpumalanga contracts relative to the baseline after 2030 while the Northern Cape expands due to renewables-led investment. Although transmission needs are lighter in Mpumalanga, the province is well-positioned for solar development, grid access, environmental rehabilitation and new industrial activity linked to the transition.

To address these challenges, the micro-study develops a Just Transition policy matrix and six structured policy packages built from four instruments: income support, training and reskilling, placement services and community and household support. Each package applies these instruments differently, depending on worker category and the timing of economic impacts, and is aligned with three timeframes: 2025 to 2030, 2030 to 2040 and beyond 2040.

Package 1 is Core Transition Support, targeting about 4 700 workers in high-risk, low-skill coal jobs. The instrument mix is income support at 70 percent, retraining at 20 percent and placement and entrepreneurship incentives at 10 percent. The cost envelope is R5.8 billion over ten years.  The objective is to prevent destitution, maintain income continuity and allow time for skills pivoting into areas like solar operations and maintenance, grid expansion and environmental rehabilitation. These workers have the least mobility and will be among the first to face retrenchment after 2030.

Package 2 is Intermediate Labour Market Activation, targeting 44 000 semi-skilled workers with transferable skills. The mix is retraining at 40 percent, placement and entrepreneurship incentives at 40 percent and income support at 20 percent. The cost envelope is R11.5 billion between 2030 and 2040. The objective is to reintegrate the majority of the coal workforce through job matching and skill transfers. This group represents the bulk of transition exposure and the programme must peak around the period when major plants and mines close.

Package 3 is Advanced Skills Redeployment and targets 17 000 professionals and technicians. The mix is 60 percent retraining in renewable system design, environmental monitoring, operations, maintenance and safety oversight; 30 percent placement incentives and 10 percent income support. The cost envelope is R3.2 billion between 2028 and 2035. The objective is to retain technical capability within the provincial economy and redeploy talent into industrial clusters linked to green manufacturing.

Package 4 is Community Development and Livelihood Diversification and is aimed at households in mining-dependent communities, particularly youth and women. The mix is 40 percent community enterprise support, 30 percent local infrastructure and 30 percent household resilience interventions. The cost envelope is R8–10 billion between 2026 and 2040. The objective is to broaden non-coal employment opportunities and improve resilience in towns such as eMalahleni and Middelburg.

Package 5 is a Social Protection Bridging Fund for workers awaiting retraining or placement. The mix is short-term income support for 12 to 18 months. The cost envelope is R4 billion over a decade. The objective is to maintain household stability during administrative delays and prevent poverty traps during programme rollout.

Package 6 is the Provincial Economic Diversification and Investment Facility for private investors and municipalities. The instruments are blended finance vehicles, tax incentives and concessional lending through development finance institutions. The cost envelope is R15–20 billion capitalised through publicprivate structures. The objective is to stimulate new industries in Mpumalanga including battery manufacturing, solar component assembly, logistics, biomass and agri-processing.

The combined fiscal requirement for the six packages is between R45 billion and R50 billion in nominal 2024 rand, equal to about 0.6 percent of cumulative national GDP over 15 years. This sits within feasible social-budget parameters. As a country we now need to finalise these policy instruments so that Mpumalanga can manage the transition without severe socio-economic disruption while South Africa secures the national benefits of the Green Industrialisation pathway.

Thomas Garner holds a Mechanical Engineering degree from the University of Pretoria and an MBA from the University of Stellenbosch Business School. Thomas is self-employed focusing on energy, energy related critical minerals, water and communities. He is a Fellow of the South African Academy of Engineering and a Management Committee member of the South African Independent Power Producers Association.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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