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Eskom moves to ensure coal supply

Matla power station 
Johannesburg, South Africa — ESI-AFRICA.COM — 10 January 2011 – South African power utility Eskom has reiterated its call for urgent coal export restrictions, suggesting a formula-based export quota for mining companies.

“This regulation of coal exports should actually already have been introduced,” said Eskom CEO Brian Dames in an interview here with Miningmx. He said Eskom was losing between 500MW and 1 000MW per day due to poor quality coal-supplies to power stations.

“Two power stations in particular, Duvha and Matla, are struggling to obtain the right quality of coal,” said Dames, “where Eskom was sometimes forced to mix waste coal with higher quality coal.”

The likeliest way of regulation would be to determine an export ratio, which would force coal producers to supply Eskom with two tonnes of coal, for example, for every one tonne exported.
According to Dames, this is the usual form of regulation in countries where exports are restricted.

He acknowledged, however, that miners’ ability to export was vital to Eskom and other industries. “We need capital expenditure on new mines to keep our power stations on the go. Our coal producers don’t have capital for that – the only way they can get it is by exporting. However, we must find the right balance with this,” Dames stated.

Last week, export prices of coal rose to US$140/t from US$110/t at Christmas as a result of the flooding of coal mines in Australia. Predictions at the end of last year were that coal prices would remain between US$100 and US$130/t until 2013.