HomeIndustry SectorsFinance and PolicyFuture Eskom demand will require R100 billion investment in Mining

Future Eskom demand will require R100 billion investment in Mining

Johannesburg, South Africa — ESI-AFRICA.COM — 22 June 2011 – Mining companies will have to invest more than R100 billion in coal mines between now and 2018 in order to meet Eskom’s future fuel demand, according to the South African national power utility.

Eskom chief commercial officer Dan Marokane said that about 15 new mining projects were required over the next two to four years alone to meet Eskom’s demand.

Addressing the Coaltrans conference here, he added that a large number of mining projects would have to be brought on line fast. “The longer we wait, the more critical the situation becomes,” he said.

Eskom was forced to implement a new build strategy in 2008 after the national electricity grid was brought to the point of near collapse.

Earlier this month, the Free Market Foundation estimated that the electricity crisis cost the South African economy close to R120 billion that year, or almost 5% of gross domestic product.

Eskom, whose new build programme will see two new coal-fired power stations come on line starting in 2012, requires more than two billion tonnes of new coal supplies to meet current planned station operating lives.

“The bulk of this coal is at a quality specification that competes directly and indirectly with lower-grade exports,” warned Marokane, adding that Eskom expected a substantial shortfall and increasing competition for coal between export and domestic users.

“A collaborative approach with the mining industry will be mandatory to ensure coal supply (both volume and quality) for domestic power generation,” he said.