Eskom warned last week that the country was at risk of power rationing and now the utility is playing hardball with local coal suppliers it accuses of supplying low quality fuel.
Quoted in Miningmx, chief executive Brian Dames reiterated Eskom’s call for urgent restrictions on coal exports, suggesting a formula-based export quota.
“This (the regulation of coal exports) should actually already have been introduced,” Dames said in an interview last week. He said poor quality coal supplies were reducing Eskom’s daily capacity by between 500 megawatts and 1 000MW.
The utility said there had been a marked deterioration in the quality of the total coal deliveries to Eskom since 2006.
According to Eskom, these trends, combined with higher load factors, have resulted in significant coal-related load losses and an equivalent financial loss to Eskom of approximately R1 billion.
Eskom consumed 122 million tons of coal last year. Local power stations use coal with a calorific value of between 19.5 and 23. Export coal is above 23 calorific value on average.
Low coal quality reduces the efficiency of a power plant as more coal is needed. This reduces the efficiency of boilers and increases costs.
Hilary Joffe, Eskom’s spokeswoman, said yesterday that the utility was addressing the issue of coal quality.
“Standards have slipped, they are below specified requirements and sometimes specifics are not tight enough… We are negotiating with miners to implement quality specific requirements, to ensure that coal supplies improve.”
Two power stations in particular, Duvha and Matla in Mpumalanga, were struggling to obtain the right quality of coal, Dames said. Eskom was sometimes forced to mix waste coal with higher quality coal.
Joffe said Eskom was renegotiating the contract at Duvha and implementing a beneficiation process at Matla.
BHP Billiton Energy Coal South Africa supplies coal to Duvha, where its contract is being renegotiated.
Exxaro Resources supplies coal to Matla.
Eskom’s suppliers have disputed a decline in coal quality.
BHP Billiton Energy Coal SA spokesman Ruban Yogarajah said the quality of the coal supplied to Eskom was within the specifications of contracts entered into between the two companies.
“While coal production has been affected by heavy rains in recent weeks, all of our mines are operating as normal and the company continues to supply coal to all of its customers,” Yogarajah said.
Pranill Ramchander, the spokesman for Anglo American, said the company was meeting the requirements set out by Eskom.
Joffe explained that following the recent commodity boom, the demand for fuel had resulted in countries like India competing with Eskom for lower grade coal supplies.
However, the company was much better placed than in January 2008, when there were stockpiles for 10 days only. Currently, Joffe said, available coal stockpiles would last an average of 41 days.
“At that point stockpiles were low and the quality was affected by rain… We should be able to get through problems,” she said.
Joffe said there had been challenges with operating procedures for the handling of wet coal in 2008. - Dineo Matomela