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Eskom plans to build up coal stockpiles

Johannesburg, South Africa — ESI-AFRICA.COM — 29 August 2011 – South African national power utility Eskom Holdings plans to build up its coal stockpiles to 40 days during the course of the third quarter of this year, as it aims to boost reserves ahead of the rainy season.

State-owned Eskom “’ which uses mainly coal-fired plants to generate about 90% of the electricity in Africa’s largest economy “’ has to rebuild its stock levels which fell slightly after miners in the sector went on a one-week strike in July.

“We are projecting to build to 40 days (from 36 days) in the third quarter. Because of the strike we will buy an additional 5Mt this year to ensure we maintain our coal stocks,” CEO Brian Dames said.

“Eskom managed to keep the lights on during a tough winter in South Africa, thanks to lower than expected demand and initiatives put in place to manage supply, but risks to the system remain,” he added.

“We are managing a tight power system. We are on alert and will be for the next five, and especially two, years while we build new capacity,” Dames continued.

Eskom is investing heavily to build new capacity and prevent a repeat of a 2008 power crisis that hit the key mining sector, costing the economy billions of dollars in lost output.

Dames said Eskom would try sourcing the coal from competitive suppliers, including small black-owned miners. “It is also very important that we make sure that we support black-owned mining companies,” Dames said.

Eskom has been struggling to secure all the coal it needs to power South Africa, with miners focusing on more lucrative exports to Asia. South Africa is a major exporter to India and China, moving away from traditional European markets.