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Eskom may be facing fuel supply problems

Export coal being
loaded at the Richards
Bay Coal Terminal
London, England — ESI-AFRICA.COM — 08 June 2011 – South African national power utility Eskom Holdings may suffer severe fuel supply problems because of India’s growing appetite for low-grade, low-priced coal, according to Graham Parker, director of traders Traxys Coal.

A shipment of 4,800 kc/kg coal, significantly below the standard grade of around 5,800 kc/kg for export coal, was sold last month to an Indian buyer by one of South Africa’s biggest mining companies, Parker said at the Navigate shipping conference.

“India’s demand isn’t for standard 6,000 kc/kg coal, it’s increasingly for low calorific value (c.v.), low priced coal," he added. “India is dragging in Indonesian sub-bituminous and what might be seen as mining discard from Australia,” he said.

“In the last week or so a cargo of low c.v. coal has gone from South Africa to India and the importance of that cannot be underestimated,” Parker added.

Lower energy content coal, which is mined simultaneously with export grade coal in South Africa, is almost entirely burned by state utility Eskom, which generates more than 90% of the country’s power.

Any drift of lower c.v. coal into exports and away from Eskom would either force the utility to pay at parity with export prices or exacerbate South Africa’s existing power difficulties, he said.