No risk of Eskom running out of coal, says GM

Eskom is evaluating at least three requests for proposals for coal supply — including one for 100-million tonnes — and has other options, so it expects no difficulty in sourcing coal in future, according to the power utility’s senior GM of primary energy, Ayanda Nteta.

She was responding on Wednesday to questions at the Fossil Fuel Foundation’s workshop on coal infrastructure and logistics about a looming “coal cliff” after 2020.

For years, coal analysts have warned that lack of investment in large new mines jeopardises Eskom’s ability to operate coalfired power stations, which make up 90% of its fleet.

Xavier Prevost, senior analyst at XMP Consulting, said SA’s coal-mine output fell 2% in September compared with a year ago.

“The coal cliff predicted for 2020 is happening,” he said. But if Eskom was willing to invest in cost-plus mines — the large mines that produce more than 80% of Eskom’s coal — it would help to ease the shortage.

Nteta said Eskom was investing in its cost-plus mines, including upgrading infrastructure to carry more coal to power stations such as Arnot by rail rather than road.

Prevost said inland coal prices in SA were now at exceptionally high levels. The average price for duff (a low-quality product) was R765 a tonne while peas, a prime product used in boilers, sold for about R1,068 a tonne.

Prices were expected to rise again in 2018. Prevost said this was due to strong demand while SA’s production was dropping and exports were increasing.

Exports in September hit a record of 8.07Mt for a single month, reflecting good demand from India and South Korea.

There were still untapped coal resources in SA but banks were reluctant to lend to the sector to develop new mines, Prevost said.