Big bribes, illegal guns: Inside the world of the ‘coal mafia’

Illegal guns, big bribes, signal jammers, secret meetings late at night — and illicit fortunes running into millions of rand.

This is the world of the “coal mafia’’ that has struck black gold, hijacking vital coal supplies destined for Eskom power stations and exporting the coal at 10 times the price paid by the power utility.

Russia’s war in Ukraine has meant even bigger profits for the syndicates, which public enterprises minister Pravin Gordhan has described as a “coal mafia’’. Police minister Bheki Cele has announced a new national police-led effort against the syndicates.

The Sunday Times established contact this week with an experienced former operative in the coal mafia operating in the Mpumalanga coalfields. He claims to now be in a legitimate coal business, but fears for his life.

He told the Sunday Times how for years he worked for one of the many illegal “black site” operators — middlemen traders who buy and sell coal around Middelburg. 

In many cases, coal loads are swapped for lower-grade coal or discarded coal by-products, which are inefficient in generating electricity, or even worse, damage power stations. The result in both scenarios is increased load-shedding, which has crippled SA's economy.

While Eskom will not say how much it pays for coal, it is believed to be between R400 and R750 per tonne. The current export price for coal is $344 (about R5,600) a tonne.

The former coal bandit explained how the coal was switched. “Let’s say we have this guy who exports, and he has good-quality coal. He also has discard [a coal mining by-product that is not useful in generating electricity] in his yard.

“Another guy’s truck is on its way from a mine to Eskom with RB3 coal — the grade of coal used in Eskom's power stations. 

“The truck makes a slight detour and stops at the black site. It drops off its load and replaces it with a load of discard mixed with coal.”

When he was employed by the black site, one of his tasks was to operate a signal jammer.

“I’d drive in my bakkie, 9mm and AR15 by my side, in front of the truck that is loaded with coal. When we near the black site I activate the signal jammer and the truck pulls into the site. That way the trucking company does not know their truck has been diverted.” 

He says the jammer is switched off again when the truck is back on the road. 

“That truck, even if it is sealed or has tracking ...  there are jammers, everything is in place.” He says coal thieves circumvent the cargo seals and other security mechanisms put in place to prevent the theft and contamination of coal “the old fashioned way”.

“Money greases the wheels and with money anything is possible in Mpumalanga.  

“The security was involved, the weighbridge was involved (two trucks load coal but only one is entered into the system), the guy in charge of the labour force on the ground was involved, sometimes even the mine supervisor. They all got a few rand. 

“There was usually a middleman who came with the truck. You pay him, and he pays everyone in the chain. A driver can get up to R30,000 per load. The minimum cut for a driver is R9,500. It all depends on the quality of the coal.”

He says the scale of the theft is enormous.

“One night almost 2,000 tonnes of RB1 (high-grade) coal was dropped off. You can do the sums. To give you an idea, 2,000 tonnes fills 65 trucks.”

He says the industry is violent, rife with illegal firearms.

“If you want to take these guys on, you have to have your shit in a row. These guys are serious. Shots will be fired.”

He claims there is no fear of law enforcement.

Asked about the police, he laughs wryly. “They get paid. Some monthly and some yearly. There is even a brigadier who gets paid.”

While he says his business is now “totally above board”, he is scared.

“I never go anywhere without my nine-mil (9mm pistol) strapped to my side and my AR15 (semi-automatic assault rifle) in my bakkie. If these people knew I was talking to you, my wife and my children would get hurt,” he said.

While criminal coal syndicates have been operating for years, the recent spike in coal export prices has seen the practice soar.

SA's coal prices reached all-time highs in March and April, according to a World Bank report, partly due to Russia's invasion of Ukraine. In 2020, Russia accounted for almost one-fifth of global coal exports, but widespread sanctions have halted this.

A global natural gas shortage has also created higher demand for coal. 

About 62% of the coal used by Eskom is mined in Mpumalanga, with the remainder coming from Limpopo.

The government has set up multidisciplinary economic infrastructure task teams (EITTs) to investigate various types of infrastructure sabotage, including the coal industry in Mpumalanga.

Last month, public enterprises minister Pravin Gordhan said a “coal mafia” in Mpumalanga had infiltrated the structures of legitimate companies and set up parallel operations in illegal mining and coal. 

He said this resulted in Eskom receiving substandard loads of coal, including pieces of metal and rubble mixed in that damage its plants and contributed to load-shedding.

Cele told a media briefing on August 1 that “the government is firm on its position that these criminal activities playing out in our power stations are deliberate acts of sabotage and will be brought to an end”.

“We know these crimes are being conducted by well-organised criminal syndicates who are hell-bent on destroying the utility and also damaging the country’s economy. We simply won’t sit back and let criminals run a parallel government that threatens to plunge this country into darkness.”

• R30,000: What a driver earns for each load of stolen coal

• 40: The number of loads lost by one insurance client in April

—  In Numbers

Libra Insurance Brokers has 10 branches in SA and one in Namibia. Chanel Badenhorst, the Emalahleni branch claims manager, says claims for “contaminated loads of coal” is a relatively recent problem. 

“Our first say of this type was in early April. After that, the claims spiked in April and May.

“In April alone, we lost 40 loads. That is a loss of R4m for our clients, and we lost all of them in the Middelburg area,” said Badenhorst.

“The theft, swapping and contamination of coal has grown to such an extent that most mines now insist that transporters have driver fidelity insurance for their drivers. So when your employees steal your coal, the loss is covered.”

The Sunday Times spoke to more than 15 people working directly in the industry, all of whom were too scared to go on the record for fear of retribution by the syndicates.

Among them were owners of transport companies, police officers, a security company owner and high-ranking members of government entities and departments. They all told similar stories of how the syndicates work.

Though Eskom says the prices they pay for South African coal are “commercially sensitive,” coal traders told the Sunday Times they pay “between R400 and R750 per tonne”.

Minerals Council SA spokesperson Allan Seccombe says SA exports coal mainly to Europe, South America and China.

“We know crime in coal mining in Mpumalanga is a widespread problem and that affects our members and our community. We are in active collaboration with the security cluster to address the issue,” he said.

An Emalahleni coal trader, who drove coal trucks for three decades, four years of which were spent delivering coal to Eskom, stopped driving and started trading in the precious resource a few years ago.

“Before the Ukraine war started in March, the export price for coal was $85 per tonne. Now it is $340.”

“This is where people start mixing RB3 with discard or lower-grade coal and sending it to Eskom. If you and I get 55,000 tonnes from here to the Richards Bay harbour, we walk away with R16.5m each. One truck takes 34 tonnes. 

“The extent of the corruption in this province is almost too large to understand. To give you an example: transporting coal by rail is much cheaper than by road. We are talking R120 per tonne vs R750 per tonne. If you destroy the rail network, you get more money for transport.”

He says almost every mine, trucking company or black site he’s dealt with has criminal elements somewhere in their structures.

“And there are people subcontracted to Eskom who have to take samples of delivered coal to have it lab tested. Many of these people are being bribed — some as much as R100,000 a month.”

A high-ranking member of the government EITT task team says the problem is widespread.

“It ranges from good quality coal diluted with inferior coal before it is delivered to Eskom, to diesel being sold to Eskom and never delivered though the documentation floating around in Eskom says it was. Whatever facet of our Mpumalanga energy corridor you can think of, rest assured, it has been captured.”

Gordhan's chief of staff, Nthabiseng Borotho, and DMRE spokesperson Ernest Mulibana referred the Sunday Times to Eskom.

Eskom spokesperson Sikonathi Mantshantsha said that of the “between 100-million and 110-million tonnes of coal bought by Eskom a year, 62% is mined in Mpumalanga. 

“The quality of coal can affect a power station in many different ways depending on the nature and extent of the coal quality.” He said that when inferior coal was burnt “the power station will generate fewer megawatts”. 

“Supplying Eskom with a finer material in terms of particle sizing affects the materials handling systems at the power station.

“Supplying Eskom with rocks or foreign material, for example ferrous and non-ferrous materials, can cause severe damage to the mills and other critical components of the power station.”

“Eskom receives about 60% of its coal requirements via conveyor belt from the mines adjacent to its power stations and 40% is received via truck or train.

“The coal price paid by Eskom is commercially sensitive. We can, however, confirm that the average coal price paid by Eskom is substantially lower than the export price.”

Mantshantsha says Eskom has processes and controls in place to measure the quality of the coal at source before it is dispatched.

“Eskom also does a certain amount of coal verification at the receiving power stations. Of course, there have been instances where substantially inferior product gets delivered to Eskom, having bypassed any control mechanism that has been put in place,” he said.

“Eskom uses accredited laboratories to test coal samples. It is not possible to estimate with any degree of legitimacy how much coal gets stolen (as you would first have to catch the thieves to know what’s been taken). Important to note is that coal that has not left the mine remains property of the mine until such time it gets delivered to and is received by Eskom.”

Asked about the so-called black sites, Mantshantsha referred the Sunday Times back to the DMRE, which did not respond to repeated requests for comment.