[miningmx.com] – TATA Power, a division of Indian conglomerate Tata
Group, has raised the possibility that it might one day work in joint venture with South
African utility Eskom in liberating stranded coal assets.
Commenting on whether Indian buying of low value South African coal supplies was a
threat to the country’s energy security, Tata Power regional Africa head, Nandkishore
Menon, suggested that Indian participation in the market was an opportunity.
“We think it’s an opportunity because there are stranded assets in Mpumalanga
province that might never get developed,” Menon said. He was speaking at the
Coaltrans conference in Johannesburg. The increased participation of utility buying of
South African coal could actually serve as an insurance policy to local coal assets
owing to their reliance and resilience, he said..
India is increasingly buying South African coals that might other be destined for
Eskom which has said there may be a 40 million tonne supply deficit from 2019,
although Kiren Maharaj, divisional executive for primary energy at Eskom, said at the
Coaltrans conference that domestic supplies were contracted at “an acceptable level”
until 2018 . “We just haven’t seen the investment in local coal mines,” Brian Dames,
CEO of Eskom, told Miningmx in an interview earlier this week.
In fact, Eskom has said government should consider an export duty on South African
coal in order to support the domestic market – an idea that drew sharp criticism from
the Chamber of Mines of South Africa last year.
Nandkishore conceded that Indian buying of South African coal could be seen as a
threat to the country’s domestic supply, but that the industry ought to look at building
domestic and export supply in an integrated manner. Building a portion of revenue
based on export pricing, which normally attracts a premium, might help make a mine
more viable.
Menon said, however, that Tata Power’s approach to South Africa was a long-term one
and that the company was content to wait until it the country had secured domestic
coal supply. “We’d be looking to supply coal from South African mines for the next
generation of power plants in India, over the next 20 to 30 years,” he said on the
sidelines of the conference.
Tata Power also thought it prudent to become “gigajoule negative”; in other words,
generate as much power in South Africa as it was exporting, hence Tata Power’s joint
venture with Exxaro Resources, called Cennergi, which is seeking to establish itself as
an independent power producer. “Just exporting power is not sustainable,”
Nandkishore said.
