Coal for Eskom now top priority

06 May | Engineering News

SUN CITY (miningweekly.com) – Securing coal for Eskom was now the number-one priority, South African Coal Roadmap chairperson Ian Hall said on Tuesday.

Addressing the twelfth Coaltrans Southern Africa coal conference at Sun City, the Anglo American Thermal Coal Projects GM said Eskom needed 60-million tons a year of new-mine coal to come on stream in the next few years and 120-million tons before 2020.

While a key requirement was to get the new mines up and running by 2015, water-use licences and environmental authorisations might present greater delays than obtaining mining rights.

“There’s not even a mandatory response time for water-use licences,” he added.

To develop the required new capacity in South Africa in the next five years would be a high mountain to climb.

To complicate matters, there were oddities in the Mineral and Petroleum Resources Development Amendment Bill, including the declaration of coal as a strategic mineral, which had off-putting price implications, and the demand for greater beneficiation.

It was hard to see how South Africa could beneficiate its coal further, given that it used 75% of it domestically to produce 90% of its electricity plus the greatest output of coal-based transport fuels and chemicals in the world.

Doing any more with coal would put the country on a collision course with its Copenhagen climate-change pledges.

The 27% of South African coal that was exported generated 60% of the revenue from coal, which last year grew 9.6% to R96-billion, making coal South Africa’s biggest commodity by sales value.

“We should be looking at increasing exports, if possible, as well as meeting the energy demand for the country,” he added.

The roadmap, which was charting the future for coal to 2040 and which was poised for final release in June/July, had become a process rather than an outcome.

Though due for release in February, it was decided to subject it to independent audit, now in its end stages.

The roadmap, being compiled by the government, business and technical experts, was looking at the industry from every stakeholder’s perspective and had set out to identify what the industry would require going forward.

Despite four carbon scenarios modelled, common required actions have emerged under all scenarios.

First and foremost, South Africa could not afford to decommission its existing power stations.

Against that background, Eskom was already seeking to extend its coal contracts way beyond their current validity and new mining areas were being earmarked for continued supply to existing power stations.

“Securing coal for Eskom is the number-one priority right now, over and above coal exports,” said Hall, who added that coal would remain both the world’s and South Africa’s biggest source for electricity generation well into the 2030s.

Policy and legislative alignment was needed to attract mining investment, along with labour and productivity enhancement and infrastructure provision for coal delivery.

Secondly, the country needed to plan for its energy mix, including deciding early on another coal-fired power station after Kusile, plus the provision of water to the Waterberg coalfield.

Rail infrastructure would have to be laid for coal to be transported from the Waterberg to the existing power stations in Mpumalanga.

Hall queried why a new informal settlement was being built north of Lephalale, too far from where the main development was taking place.

“Why not plan that now and plan it right,” he said.

The magnitude of investment required for power generation was staggeringly high and dwarfed all other aspects of investment.

Coal alone accounted for 45% of energy demand in the last decade, virtually equalling oil, gas and renewables put together.

South Africa’s static production at 252-million tons of coal a year, though a significant tonnage, was a very small fraction of what China produced and a quarter of what the US produced.

While coal was South Africa’s biggest commodity by sales value in 2012, outdoing platinum, with which it had been vying for top spot for the last few years, it was not because the energy mineral was being produced in greater volume but because platinum was doing badly.

The good news was that South Africa still had an abundant 60-billion tons of coal.

“There’s still heaps of coal left in South Africa,” Hall said, adding, however, that the country was the twelfth-biggest emitter of greenhouse gas as the world’s twenty-fourth-largest economy and would have to take into account that for every ton of coal burnt, close to two tons of carbon dioxide were emitted.

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