State coal miner may fill Eskom’s need

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EskomPowerLines

Johannesburg - An increase in coal production by South Africa’s state-owned mining company may help Eskom avoid a repeat of rolling power blackouts, a government official said.

Eskom, which produces 95 percent of the nation’s electricity, cut supply for the first time in six years on March 6 after rains disrupted supplies of coal, which the company uses for more than 80 percent of generation.

Three units went down at its Kendal power plant, which buys coal from BHP Billiton’s Khutala mine.

Eskom has asked all producers for better-quality product.

Companies receive more by exporting the fuel than supplying it to the state-owned utility.

Eskom would be less prone to sub-standard supplies if African Exploration & Mining Finance, the state-owned mining company, increased output, Mayihlome Tshwete, a spokesman for Public Enterprises Minister Malusi Gigaba, said today by phone.

“You’ll have a state mining house that is mining coal and supplying that coal to Eskom,” Tshwete said.

“It may assist in a very good way.”

AEMFC sold 1.6 million metric tons of coal in the year ended March 2013, the Central Energy Fund’s annual report showed.

Eskom used 125 million tons of coal in 12 months through March 2012, the utility said in its annual report for that year.

 

Compelling Reason

 

The government is separating AEMFC from the Central Energy Fund, with the mining company set to report to the Department of Mineral Resources.

The separation will probably be completed this year, the CEF said in the report.

Securing high-grade coal for Eskom would make a compelling reason for the government to introduce restrictions on exports, Tshwete said.

“It’s not like Eskom’s demands for coal are going to completely stop exports,” Tshwete said.

“What we’re speaking of is making sure it has at least the bare minimum it needs to have an efficient power system for our economy and our country.”

South Africa exported a record 70.2 million tons of coal from the terminal at Richards Bay, the world’s largest single facility for the fuel, in 2013, 2.8 percent more than a year earlier. - Bloomberg News


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