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Jun 29, 2007

On-The-Air (29/06-2007)

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Every Friday morning, SAfm’s AMLive’s radio anchor Jeremy Maggs speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Maggs: Plans, I understand, are at an advanced stage to open up a new coal treasure chest in South Africa’s Waterberg region.

Creamer: South Africa is in the fortunate position of having another coalfield that is pretty hot. That is in the Waterberg. We have been relying on Mpumalanga, Witbank and Middelburg regions for decades now. Those areas are depleting as far as coal is concerned. We are lucky to have the Limpopo province alternative and already the new greenfields Medupi power station, an R80-billion power station, will rely on Waterberg coal. The coal there is far more complex, but people have been studying it for the last quarter century and they have plans to beneficiate it. This will bring the value out of that area. It needs to be developed correctly and they have the proper plans to do this. Already, you have high-value products planned there, char plants and market coke plants coming out of there. They are even talking about the Sasol-type plant to produce petrol and diesel from coal, a coal-to-liquids plant. But, whether it will be Sasol-type technology or not, is a moot point. They might go the direct liquefaction route that requires less water. It is a water-short area, which is another challenge for the area. The dam there is having its dam wall heightened to bring more water into that area. It is going to be interesting to see how this unfolds but at least South Africa has a new area to rely on for energy coal.

Maggs: We are talking about energy here and you are also telling us that Eskom is working on a new power-station project that is expected to slash costs.

Creamer: High prices are a big factor in today’s market and if you can come down the cost curve, it is very encouraging. At Majuba power-station, they have been working on a project that could lead to an integrated gasification combined cycle plant. That is a big mouthful, but it means that certain coal that cannot be mined economically, like the situation now at Majuba where you just can’t get the coal out of the ground economically, can still be used. So, what do you do with that coal? Are you going to leave it unmined in the ground or are you going to get energy out of it? The new method of getting the energy is to drill into the coal-bed underground on site and ignite that in the presence of oxygen and water and it turns into a syngas. You take that gas out of the mine where you couldn’t get the coal out of, you bring that into the power-station. This is the plan that they have got at Majuba, which will mean that they can turn that coal that would have been sterilised in the ground to account. This is an answer to a maiden’s prayer, because it also brings you down the cost curve. It can operate at about 70 % of conventional power-stations cost, even capital costs will come down as well as emissions. So it is a very clean power station with a lot of advantages.

Maggs: The good news side of the equation on this Friday morning, but you also have some concerns about the cost of Transnet’s new Durban-to-Johannesburg fuel pipeline.

Creamer: We have a very necessary fuel pipeline. We know that inland refining capacity for producing petrol, diesel and jet-fuel is limited. We know that the growth, particularly in the Gauteng heartland. We don’t want to sit in a situation where we run out of fuel like we ran out of electricity. We need to plan very quickly. This is an urgent pipeline, but it is being delayed because of regulatory issues. Nersa, which is the regulatory authority, does not have a methodology to determine what sort of tariff should be charged. Transnet wants to increase this tariff in order to fund the new pipeline. They already have an existing pipeline. This will be a multiproduct pipeline, 700-km long and coming up from Durban to Gauteng, bringing us petrol and diesel and jet-fuel. Urgently needed, particularly around 2010. We will have a lot of activity as we know around 2010 and this delay is also causing costs to soar. The initial cost of this pipeline was R9,5-billion and we are now talking about R11,5-billion. So, even though regulatory issues are supposed to keep costs down, in this case perhaps they are even encouraging costs to go up. The big issue is for us to get that fuel up here. We know that inland refinery capacity is limited and a lot more fuel is being imported directly and this pipeline will give us a total capacity of 25-billion litres a year, which is around what we are going to need looking forward.

Maggs: 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.


Edited by: Creamer Media Reporter
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