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Coal suppliers must provide power plants

Eskom must have
coal to supply power
Johannesburg, South Africa — ESI-AFRICA.COM — 25 November 2010 – South African power utility Eskom Holdings Limited says the country needs to ensure that it has sufficient, affordable coal supplies for domestic power plants, as exports become more lucrative for producers.

“Competition with exports is raising domestic coal prices, and that has an knock-on effect on electricity tariffs,” said Eskom Coal Purchasing Unit manager Jeanie Moothoo in a speech here. “Domestic coal prices are expected to continue rising,” she said.

“There needs to be a clear policy on coal exports versus domestic requirements,” she added, “and domestic pricing principles need to be clarified.”

Producers can make more money by selling coal on the export market to India and China than to Eskom, deputy mineral resources minister Godfrey Oliphant said last week.

BHP Billiton Limited, Xstrata plc and Anglo American plc are among the largest coal producers in South Africa, which generates about 90% of its power from the fuel.

The government said in 2008 that it might limit exports of coal from the country. Coal shortages contributed to a power crisis that shut down mines, smelters and shopping malls in South Africa during the first quarter of that year.

The government will consider amendments to mineral laws in the next few months to regulate coal supplies, Fin24 reported last week, citing Oliphant.

“Business exists to maximise profits,” Landi Themba, director of coal and gas policy at the Department of Energy, said in a speech in Johannesburg. “But coal is a finite resource. If we don’t manage it well, we could exhaust it sooner than we expect.”