Eskom faces new power crisis

Johannesburg – Eskom again faces power shortages. Within six years the utility will have a 40m tonne coal deficit to meet its annual requirements.

This shortfall is owing to Mpumalanga’s shrinking coal reserves, which need urgent supplementation with coal from the Waterberg area, which has 70bn tonnes of shallow coal reserves lying between Lephalale and the Botswana border.

Every year after 2018 the shortfall will assume greater proportions because of Mpumalanga’s shrinking reserves.

By 2040 only five of the 13 coal-fired power stations in Mpumalanga will still have coal.

Transport costs to Mpumalanga will be between R100 and R200/t, which means the coal will cost 50% to 100% more than the R209 that Eskom is currently paying for coal from those mines mostly close to the power stations. Electricity consumers will ultimately bear these costs.

Railway lines are now hurriedly being built to get the Waterberg coal in Mpumalanga, but the only long-term solution is to build more power stations at Medupi and Matimba in the Waterberg area, where half of the country’s remaining coal resources lie. Last month Eskom asked the 15 owners how much coal they can make available for the Mpumalanga power stations.

Exxaro, the only one of the 15 mineral-right owners producing coal, said it was prepared to provide 2m tonnes a year by 2014 and, by 2018, to increase this to 30m or even 40m tonnes, depending on Eskom’s specifications.

Transnet committed itself to improving the carrying capacity of the railway line to 23m tonnes/year by 2016 and eventually to push this up to 80m to accommodate, inter alia, for coal exports from Botswana.

Owners of the 70bn tonnes of coal in the Bushveld are however frustrated and disillusioned by the delay in providing a legal framework for erecting private, independent power stations while the country pays higher prices because of electricity shortages.

The electricity regulation bill and that on independent system operators, which will remove control of the country’s power grid from Eskom so that independent operators can also use it, has been dragging on for three years.

Construction of private coal-fired power stations cannot start before these matters are finalised. It has become increasingly obvious that independent power generators are the key to the country’s energy problems.

There is also enormous frustration in the mining industry because Eskom is buying electricity back from chrome smelters.

This winter this has brought half of the ferrochrome industry to a standstill and resulted in South Africa surrendering considerable market share to China.

“How can Eskom be proud of us getting through winter without power failures while effectively there has been commercialised load-shedding?” a player in the ferrochrome industry said to Sake24.

- Sake24