Aug 13, 2010
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Molebatsi: I see that today we are dealing with things related to power, electricity and there has been a major conference on energy down in Cape Town. Steelmaker ArcelorMittal plans to generate its own electricity.
Creamer: People who in industry are looking for headroom and now we have got the steelmaker ArcelorMittal which energy situation probably saved by the global economic meltdown. It can produce 8-million tons of steel, but its only been using about 66 % of its capacity during 2009 and now in the first six months in 2010 at 76 % of what it can do.
In the meantime they are realising that it needs to look to more energy security, because Eskom has said that its got to use 90 % of what it was using in the past. So its on a restricted path. Now it is looking to say that we can through our own sources, these sources are coke oven gasses, blast furnace gasses and waste heat which we should have been using long time ago, we can generate our own electricity.
They are looking at about 200 MW possibility and they are hoping that they might be placing some orders this year. Along with that initiative to get itself some energy headroom and to release its dependence on Eskom. It also wants to reduce its carbon-footprint, so there is also always a green element in this initiative.
Molebatsi: Now we see MTN has begun generating its own electricity. Its not a matter of we will, but we are.
Creamer: We are generating. So here, a company whos core business is cellphones and telecommunications say hang on, we also want energy security. Here in a building in Johannesburg, their headquarters, they have made a section of it for the data centre and the test facility centre.
This has now got independent energy. It is a small 2 MW, but still it is showing the thinking and the trend. What they have done is that they got this energy at half the price of what City Power charges it in Johannesburg. It is using gas, so it goes to Egoli Gas, it gets the methane gas in and then uses a trigeneration plant to generate this 2 MW of electricity and at the same time it earns itself carbon credits through the Clean Development Mechanism.
So, people are looking to also getting greener and in this process it also develops its own cooling, because these particular data centres and test facilities need this cooling facility, so it kills two birds with one stone. But, it is also because MTN is in 22 different African countries, its saying to itself that in Nigeria we are spending 6% of our costs on diesel, we have got a generator powered by diesel, so can't we migrate some of these ideas to our 22 other centres in the world.
So it might not just be something that happens in Johannesburg, but MTN showing a trend of people becoming self sufficient in electricity.
Molebatsi: Well 6 % of MTN's budget that must be massive. So it is really good business sense besides the environmental impact and so on.
Molebatsi: South African industry as a whole and the mines are taking steps to reduce their exposure to Eskom.
Creamer: It is across the board now, the World Cup is over the honeymoon is over and everybody is back down to business. What ArcelorMittal and MTN are doing is going across a broad section of South African industry where they are doing their feasibility studies all around greater energy security and coming down the cost curve, because the business plan now is that the crossover between Eskom tariffs and generating your power comes through in 2011/12.
That is when you will possibly be able to generate your own electricity cheaper then what you are getting it at. So, there is a business case for all this. We see even with mining companies that in other forms of energy like Exxaro, they are looking at solar power in Limpopo, because there is a lot of heat and concentrated solar power even in an iron-ore company in the Northern Cape.
Also looking at solar power concentrated energy. They are looking at wind energy and saying that possibly with the expectation the envisaged increase in Eskoms tariffs going up it won't be long before we will be at a sort of wind energy tariff. So all those renewable energies will come into their own because of the higher prices that Eskom will be charging.
Molebatsi: Martin, let me ask you a question. Is there any sort of incentivisation from the governments side to try and get more and more of these sorts of thinking being put in place by the private sector.
Creamer: What is happening is that they have got their tariffs coming through, so we have got the renewable energy tariff that is through and we know that you can get R1,25 per kilo-watt hour for wind energy.
But, what needs to come through pretty urgently is what we call the Cofit tariff, which is the cogeneration, because it is wrong that gasses are still being flared and burnt when those can actually be harnessed in factories like ArcelorMittal is doing. Take that coke oven gas, blast furnace gas and waste heat at Saldanha and turn it into electricity.
Molebatsi: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he'll be back with us at the same time next week.
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