HomeIndustry SectorsGenerationGlobal power generators competing with Eskom for SA coal

Global power generators competing with Eskom for SA coal

Dan Marokane,
MD of Primary
Energy, Eskom
11 June 2010 – Eskom MD of Primary Energy, Dan Marokane, warned that the increased export of high-quality coal from South Africa which left the country’s power utility with poorer quality coal and lead to power generation efficiency losses, could cause maintenance issues now and in the long term.

“It is concerning that local mines are exporting the majority of their high-quality coal while local power producers are left with coal, which is at the lower end of being acceptable. If we had the same high-grade coal that was being exported as a reliable fuel supply, we would be able to make up enough generation capacity to recover [a] significant amount of our reserve margin without additional infrastructure,” he told a dinner hosted by corporate finance and research company Merchantec Capital.

South Africa exported about 25% of its coal output, making it the world’s fourth-largest exporter.

Marokane said that there was competition between local and international power generators to buy South African coal.

“India and China’s economic growth, both of which are over 8% per annum, have caused export prices for coal to increase to levels that are above those that South Africa would pay for electricity generation, making it more attractive to sell to the export market,” commented Merchantec Capital head of climate change Peter Oldacre.

Marokane added that the coal exports from South Africa might be higher, if not for the restricted capacity on the rail line to the Richards Bay Coal Terminal (RBCT).

The coal lines could only transport 70-million tons a year of coal, while the RBCT had a 91-million-ton a year capacity.

Marokane again warned that South Africa would face power constraints between 2011 and 2013 and again between 2018 and 2024.