JOHANNESBURG (miningweekly.com) – Power utility Eskom is concerned about the rising cost of coal in South Africa and has called for greater competition in the industry.
“Coal costs have increased sharply. Our coal costs are too high. We need to make sure we focus on creating more competition and bring down coal inflation,” said senior GM for private energy Vusi Mboweni.
He told the IHS Energy South African Coal Exports Conference 2016 in Cape Town that it was necessary to review the costs of coal and invest more in coal mines.
“One of the difficulties we’ve had is that each power station has a specific design and uses particular coal. It gets married to one source and when that coal cost goes up, we have to find ways of managing it.”
He said having a more fluid structure would help Eskom draw its coal from more than one mining resource and create a more competitive environment.
“It's very important that we control coal costs, as they are the single biggest contributor to expenses at Eskom. It’s essential to manage those costs. We will continue to look at where to get the cheapest coal available.”
He said coal would remain a key energy source “as long as we don’t price ourselves out of the market. We must remain competitive to other energy sources, including renewable energy.”
Mboweni stressed that while it was vital to bring renewables into the mix, it was important to take care of coal, as it would remain the primary energy source for South Africa and for Eskom.
“Our situation is not like in Europe, where if the UK messes up, it can import coal from France. If we mess up, there is nobody that can bail us out. We are here by ourselves. We can’t fiddle with the base. You have to be very measured and careful. If we make a drastic experiment, we run the risk of creating chaos in the country.”
Mboweni said domestic coal sales were also saving a lot of jobs during the slump in coal exports.
“We will continue to be a major buyer of coal in South Africa. We project that coal will remain over 80% of our energy source by 2020.”
Mboweni said an average of 22-million tonnes a year would be sourced from new coal supply agreements, while Eskom still had two-billion tonnes of coal that it needed to contract until 2051.
The utility was also moving toward transporting coal increasingly by rail instead of road.
“We project 13-million tonnes will be moved by rail this year. Last year, we moved 11.6-million tonnes by rail. We are making those strides, trying to push away from road transport.
“We prefer to use conveyer belts, as that’s much easier for us. Our second preferred option is rail, and the last one is road. We would like to restrict our use of road, from just the mine to rail sidings.”
On load-shedding, Mboweni said he anticipated there would be no load-shedding up until August, unless there was an emergency. He said, so far, South Africa had sustained 142 days of no load-shedding.
“Until such time as we get the new builds out of the way, we can’t say we are really out of the woods. But for now, we are doing all the maintenance work and making sure we keep our customers with electricity.”