[miningmx.com] –IT’S almost a year since Eskom shut down the South African mining industry on January 24 because it was unable to guarantee electricity supplies.
That sparked a crisis which badly damaged business and investor confidence. So-called load-shedding (power cuts) became the order of the day and, when electricity was eventually restored, power to the mines was rationed.
Eskom embarked on an emergency campaign to build up coal stockpiles and mining companies were forced to factor self-generation of power into their planning for new projects.
A year later the situation has improved markedly, but that’s largely thanks to the downturn in the global economy which has chopped demand for power – most notably from the ferro-alloy producers.
So far 1,500MW of generating capacity has been freed up as companies like Xstrata , Samancor and Assmang have taken smelters off-line in response to plunging demand for commodities such as ferrochrome and ferromanganese.
South Africa’s power crisis remains in place. It may take five to 10 years before Eskom gets on top of the situation by constructing new coal-fired and nuclear power stations.
But Eskom has been granted a short-term breathing space which could prove invaluable to its plans.
An energy company executive’s view is that “Eskom was running two to three years late on its investment programme. It has now got that time back, but what Eskom management cannot afford to do is to lose it again through further delays in the major decisions that still must be taken.’
The immediate benefits of the drop in electricity demand are that Eskom has more leeway to do maintenance work on its stations, and that pressure on its reserve generating margin has eased for at least 2009.
Eskom spokesman Fani Zulu said: “The 1,500MW drop in demand from the smelters is a short-term benefit because these companies will want the power back when conditions improve.
“We have used the window of opportunity created by this to step up maintenance work and further stabilise the power system. In the period December 2008 and January 2009 we have had up to 9,000MW of generating plant off-line.
“That compares with 5,000MW in the corresponding period of December 2007 and January 2008, in a situation where we had to push out maintenance work in order to meet the demand for power.’
Zulu said Eskom was planning on the basis that there would be no increase in power demand during 2009 compared with 2008 because of the slowdown in economic activity.
He said Eskom has a reserve generating margin of 8% over the 2008 level of peak demand, compared with the 5.6% margin the utility had at the beginning of 2008 when compared with peak demand in 2007.
That’s still a long way from the 15% margin that Eskom is targeting, which is why Zulu added the need for the country’s consumers to save 10% on electricity demand remains “fundamental’.
How that will be achieved remains a big challenge as the mining industry continues to complain about being unfairly penalised.
Another big improvement has been in the level of coal stockpiles on hand at the various power stations. Zulu said the average coal stockpile had reached 38 days “across the system’, with all power stations having at least 20 days of coal requirements on hand.
In January 2008 the comparative figures were 13 days across the system, with some power stations sitting on only five days’ worth of coal.
That has been achieved at the cost of severe damage to provincial roads in certain Mpumalanga areas because of the need to truck millions of tons of coal to various stations from remote collieries.
Also on the plus side, construction is under way on the sites of two new coal-fired stations: Medupi near Lephalale and Kusile near Witbank.
According to Zulu, the first generating set at Medupi is on schedule to start operating in the first half of 2012 and the first set at Kusile should kick in during 2013.
On the negative side, there are concerns about Eskom’s decision not to go ahead with the Nuclear-1 project to build the country’s second nuclear power station.
Zulu said: “That is now in the hands of government, which had to step in because Eskom could not fund the construction of a nuclear plant at this stage.’
It seems government is looking at a two-year delay and plans to bring the new nuclear station on stream from 2018 instead of the original target of 2016.
According to an energy sector source, that can only happen if a decision in principle is taken in 2009 and a contract signed by the end of 2010, because of the time needed for permitting and construction.
So there is little room for further government procrastination of the kind that plunged South Africa into the present power crisis, when it refused Eskom permission to build a coal power station in 2000.
