[miningmx.com] — ESKOM should reflect on its own deficiencies before blaming the mining industry for its coal quality and supply concerns, Chamber of Mines (COM) CEO Bheki Sibiya said on Friday.
In a statement released by the COM, Sibiya said it was “important to get the facts on the table’ before forcing the miners’ hand on coal supplies to the power utility.
“The chamber is aware of only two power stations that have been affected by coal quality issues and all other (chamber member) collieries were supplying coal to Eskom at the prescribed qualities (specified) in the contractual agreements,’ said Sibiya.
Sibiya’s comments followed a presentation by Eskom’s chief commercial officer Dan Marokane at the McCloskey Coal Conference on Wednesday, during which he said the power utility faces substantial challenges to secure the long-term coal supplies it needs for existing and new power stations.
“We have choices to make as a country if we are to find the optimal balance between coal exports and domestic energy security,’ he said. “We are concerned that the market on its own may not ensure that balance.’
Eskom’s main charge is that the mining industry wants to cash in on soaring international demand for the commodity, to the power utility’s detriment. As a possible solution, Eskom CEO Brian Dames earlier mooted a formula-based export quota for miners.
Mines Minister Susan Shabangu on Wednesday weighed in on the issue, saying government may intervene if the industry and Eskom cannot come to an agreement.
“It is not government intention to enter the minefield of specifying all the processes, and it is our fervent hope that industry will recognise the particular challenge and work with us,’ Shabangu said.
Sibiya bemoaned the fact that accusations directed at the industry have led to calls for heavy-handed mechanisms – such as price controls and quotas on exports. He added that the current issue should not be confused with the causes of the 2008 power crisis.
“The large load losses experienced by Eskom in 2008 were due to the failures of Eskom’s own maintenance programmes as well as the failure of their coal stockpile policy,’ said Sibiya.
“Again, Eskom raised the issue of poor coal quality as a major contributor to the load losses when in fact this was due to them using the “mush’ that used to be at the bottom of their stockpiles.
“Their stockpiles had been deliberately run down in 2007 and 2008 due to a policy of not keeping large stocks.’
Sibiya also said the accusation that the mining industry is diverting quality coal from Eskom for exports, especially to India, is a fallacy.
He said Eskom burns coal with an average calorific value (referring to capacity of the resource to create energy) of 19.22 megajoules (MJ) per kg and ash content of 29.6%.
The traditional European and Indian market for South African coal has an average calorific of 27.5 MJ and 25 MJ respectively, and ash content of no more than 20%.
“In reality there exists an important synergy, whereby the better coals are exported generating much-needed foreign currency and the lower quality coals are used locally for electricity generation and liquid fuel production,’ said Sibiya.
He added that the COM was not aware of any short-term coal supply problems for the existing fleet of power stations and that Eskom has already contracted supplies for Medupi and Kusile, the two large power stations under construction.
“Heavy-handed mechanisms to try and regulate the domestic coal mining industry and interference in a voluntary market system may lead to significant distortions and unintended consequences, and may well prejudice security of primary energy supply,’ Sibiya said.
“There is no coal supply or quality crisis. Rather, there is an industry that is willing to work with the relevant government, labour and industry stakeholders to facilitate continued security of primary energy supply and the continued growth of South Africa’s world class coal mining industry.”
