A methane cloud was detected by satellite near coal mines in South Africa, drawing attention to a lesser-known environmental risk that comes from using the fossil fuel.
The potent greenhouse gas — methane traps roughly 84 times more heat than carbon dioxide in its first two decades in the atmosphere — was emitted at an estimated rate of 65 metric tons an hour on May 10, according to Kayrros SAS. The Paris-based analytics company found the leak by parsing European Space Agency satellite observations. It was the worst plume of methane Kayrros detected in the data over Africa this year.
The cloud was spotted about 125 km east of Johannesburg in an area where Sasol has several coal mines as well as chemical and fuel operations. Sasol said it didn’t record any elevated methane levels that day and that emissions from its mining operations “are highly diluted and dispersed over a wide geographical area.”
Anglo American said its opencast Isibonelo mine located nearby is “highly unlikely to emit the levels” as estimated by Kayrros.
While coal is falling out of favour as an energy source because of the large amount of carbon dioxide generated as it’s burned, mining the fossil fuel also causes methane emissions because companies sometimes release the gas trapped underground to lower the risk of explosions. Methane can continue leaking after mines have been closed or abandoned. The industry is expected to generate about 10% of methane emissions caused by humans by the end of the decade, according to the Global Methane Initiative.
The problem can be mitigated if miners capture the gas and use it for power generation, coal drying or as supplemental fuel for the boilers, according to the US Environmental Protection Agency. It makes sense for companies to take the extra steps because they help boost production and increase revenues. That’s especially true in South Africa, which still depends on coal to generate more than 80% of its electricity.
If the May 10 release lasted an hour at the rate estimated by Kayrros it would trap roughly the same amount of heat as about 260 000 cars driving at 60 miles an hour, according to the Environmental Defense Fund. The satellite data didn’t show the duration of the leak.
The estimated rate correlates with a 3% concentration of methane in the air, Sasol said. The company immediately shuts down operations when any of its sensors register a level of 1% due to the highly combustible environment. Sasol said its analyzers didn’t record readings greater than 0.05% on average that day. South Africa’s Department of Forestry, Fisheries and the Environment didn’t respond to queries about the event.
Kayrros also found two other plumes in the vicinity on May 27, which it estimated had emissions rates of more than 40 tons of methane per hour.
The findings are the latest in a series of leaks that have been spotted in countries including Canada and Bangladesh. Scientists are just beginning to pinpoint the biggest sources of methane and existing data isn’t yet globally comprehensive. Observations from space can be seasonal due to cloud cover, precipitation and varying light intensity. Satellites can also have difficulty tracking offshore emissions and releases in higher latitudes.
Creating a disruption-proof supply chain in Africa
The impact of the pandemic on global supply chains has prompted governments around the world to look at ways to fix the broken links. In Africa, the launch of African Continental Free Trade Area (AfCFTA), has provided the continent with new opportunities to strengthen its regional supply chain.
Virusha Subban, Head of Indirect Tax at Baker McKenzie in South Africa, explains that there were massive breakages in key links in global supply chains during and after the pandemic, with issues including, among many other things, route congestion and blockages, manufacturing shutdowns, a deficit of skilled labour, a global shortage of key logistics components including shipping containers, a lack of space in warehouses, a spike in transportation costs and substantially increased demand for goods around the world, post-lockdown. As a result, countries have been looking at ways to relink broken chains.
In February 2021, President Biden addressed this issue by signing an Executive Order on America’s supply chains. He ordered federal agencies to review and identify vulnerabilities in key US supply chains and develop policies to ensure those supply chains would be more resilient to future shocks.
Similarly, the European Union Policy Department for External Relations issued a report on Post Covid-19 value chains: options for reshoring production back to Europe in a globalised economy. The report noted that, against the background of both supply shortages due to the pandemic, and the shift in global trading patterns, reshoring of production, the process of bringing production activities home, had become a topical issue in recent EU policy debates.
Last year, the African Union African Peer Review Mechanism 2020 published a report on Africa’s governance response to COVID-19, which highlighted Africa’s supply chain challenges and overreliance on foreign trade and suggested that the continent boost its manufacturing capacity to build a strong African supply chain that could not be weakened by global blockages.
Marc Yudaken, Partner and Head of the IMT Sector Group at Baker McKenzie in Johannesburg, notes that supply chains in Africa were already under pressure before the pandemic, due to inadequate infrastructure, corruption and security issues, poor trade logistics, overreliance on foreign imports, onerous regulatory requirements and complex customs procedures.
He explains that a recent Baker McKenzie report – A License to be Bold: Transforming Industrials outlined areas of post-pandemic focus for supply chains in the IMT sector, which included being able to adapt to new markets, embrace digitalisation and enable the disruption-proofing of supply chains. The report noted that disruption arising from COVID-19 accelerated trends already apparent in the industrials market, particularly digitalisation and trade volatility, and transformation has now gone from a “nice to have” to a necessity.
Yudaken notes that due to the global supply chain disruption, many African countries have begun looking at ways to improve their manufacturing capacity so that they can produce local components that don’t need to be imported and that can be traded within the continent.
“Reliable transport and utilities infrastructure is vital in terms of ability of the IMT sector to scale up production for regional export and to develop its manufacturing bases. To improve transport infrastructure in Africa, large projects have been announced or are in progress, including, for example, the Trans-Maghreb Highway in North Africa and the North-South Multimodal Corridor, connecting extensive parts of Southern Africa, as well as the Central Corridor project and the Abidjan-Lagos Corridor Highway project.
Further, Africa needs an adequate supply of water and electricity to increase production capacity and incentivise foreign companies to set up facilities on the continent – energy and utilities infrastructure is direly needed across African jurisdictions. Domestic policy changes that address these issues are therefore playing a crucial role in disruption-proofing Africa’s supply chains at present.”
Subban agrees that improving manufacturing capacity is a key way to remove reliance on global supply chains. A Baker McKenzie report, with Oxford Economics, AfCFTA’s US$ 3 trillion Opportunity (AfCFTA report) looked at African imports from outside the continent and revealed that manufactured products industrial machinery and transport equipment constituted over 50% of Africa’s combined needs. Currently, Africa’s external imports account for more than half of the total volume of imports, with the most important suppliers being Europe (35%), China (16%) and the rest of Asia including India (14%). By contrast, imports from other parts of Africa account for only 16% of total merchandise imports. Manufacturing GDP represents on average only 10% of GDP in Africa. This means that limited production capabilities within Africa are currently being compensated for through foreign imports. This manufacturing deficit could be eventually satisfied within the continent and enabled by AfCFTA.
“Further, in terms of rapid global digitisation, a sophisticated legal and regulatory framework that enables digital transactions is vital for full participation in global digital trade, which is expected to play a leading role in a post-pandemic trade environment.
“The trade in services, for example, is an especially pertinent area of focus for all countries in Africa and could represent a way to overcome the current production and supply chain limitations that threaten to hold up the Africa-wide trade in goods. Because a service can either be traded directly or serve as an input into the production process of a product, the liberalization of trade in services is not as hindered by current infrastructural or logistic deficits as the trade in goods. In this way, Africa’s service trade sector can benefit from bypassing the industrialization phase,” she says.
The AfCFTA report shows that the trade in services in general currently accounts for over half of gross value added in Africa. In order to fully realise its benefits, however, there needs to be a better understanding among policymakers of the important role that services can play in regional value chains. This will allow the continent to address the structural constraints on growth in these sectors. The report notes that easing restrictions on foreign government policy throughout the continent will increase the flow of service trade between countries. For example, allowing more access to the information and telecommunications systems would encourage companies to enter new markets. Further, lowering the cost of access and usage of communication and fortifying network security will encourage businesses to set up or ramp up operations in the continent
“Addressing infrastructure shortfalls, boosting manufacturing capacity, and leveraging the benefits of digitisation will add strong links to Africa’s regional supply chain, ensuring it can withstand breakages and disruption,” adds Subban.
Adapting Supply Chain Strategy
Supply chain strategies create competitive advantages for operations in a digital world. Optimized supply chain operating models are strategic differentiators and business process transformations are a major value lever for businesses.
Operational strategies assist companies to identify the ideal positions of working capital, costs, and service levels. Based on these positions, actions are defined and implemented within processes, people, assets, and information systems to improve the cost-effectiveness and services in a company’s markets.
Focusing on core competencies reduces efforts for non-core activities and drives efficiency.
Labor and force optimization
Operational locations use performance metrics to plan activities, benchmark internal performance versus other locations, manage staff, and decide on individual compensation. Reviewing how this information is used enables companies to identify ineffective performance metrics.
Network strategy and design
The goal of strategic design and optimization of supply chain networks is to find a balanced and robust structural solution for the tradeoffs of low cost, excellent service, and minimal inventory.
Africa presents unique and evolving challenges for supply chains. Even companies with long track records in the region are being forced to find new and creative ways to maintain growth and extend their reach into new countries and markets. While some of the lessons learned in other emerging regions are also applicable to Africa, it is likely that they will be only part of the solution. The rest will come from unique approaches tailored solutions and adjustments to current supply chain strategy.
Supply Chains and Their Need for Agility
The modern supply chain is broad and constantly evolving, which means that it must be agile to be efficient. Previously, supply chains met business and customer needs through a rigid start-to-end model. Consumers now have multiple options with regards to how they purchase products – in stores, online and more. Further, they now expect increasing levels of customization. An agile supply chain can meet those expectations.
In addition, supply chain sourcing has become flexible. For example, geopolitical and economic developments can influence the manufacturing supply chain. If a manufacturer requires aluminum and is unable to source it from one supplier due to trade policy, that manufacturer must be able to source it elsewhere. The ability to quickly adapt your supply chain is essential to successfully addressing this type of situation. Agility is important to achieving these types of real-time reconfigurations.
Challenges in the supply chain tend to extend beyond efficiency and cost management issues. Changing circumstances can severely impact regulatory compliance as well. Your supply chain management system needs to be flexible enough to mitigate all the risks that are generated by changes in the supply chain. An intelligent supply chain system can assist you to be efficient, cost effective and compliant with ever-changing regulations.
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