South African coal-mining major Exxaro Resources is involved in negotiations with power parastatal Eskom over the future of the Matla coal project’s exclusive coal supply con-
tract with the Matla power station.

Matla mine manager Ferdie Smith reports that, while the life of the Matla project has been 
extended to 2046, based on a production rate of 12,5-million tons a year, the project’s exclusive coal supply agreement with the Matla power station only runs to 2023, some 23 years before the depletion of the Matla resource.

“Negotiations are under way with Eskom to secure the supply of coal to the Matla power station until the Matla resource has been fully depleted. 
“However, there are a few issues that need to be taken into consideration,” he says.

The most important issue is Eskom’s attitude to renewable-energy power projects.

With the new renewable-energy feed-in-tariff system, Eskom hopes to promote the advancement of renewable energy as an alternative to carbon-based energy projects. The National Energy Regulator of South Africa has set a renewable-
energy consumption target of about 3% by 2013.

The Medupi and Kusile power stations are indications that Eskom will go for a mix of carbon-based projects and renewable-energy projects. 
However, should the parastatal completely shift its view towards renewable energy, Smith reports that Exxaro has a number of back-up plans that it can consider.

“The Matla project would be 
affected should Exxaro not be able to extend the coal supply contract until 2046; however, 
demand for coal globally will never diminish. 
“There is a significant demand for coal from India and China that the company can take advantage of, as well as a number of new power projects that are being initiated in neighbouring Zimbabwe and Mozambique,” he says.

As the company does not have sufficient capacity at the Richards Bay Coal Terminal to increase its export activities, land-based coal supply projects are the most likely 
option. However, this will depend 
largely on transport infrastructure, such as road and rail, which is a significant challenge in Africa.

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