The supply of coal to the domestic market has been secured until 2040, according to State-owned power utility Eskom.
Speaking at the yearly Role of Coal conference, which was held in Johannesburg earlier this month, Eskom system operations and planning division MD Kannan Lakmeeharan reported that the immediate future of coal was relatively secure.
“In order to power the South African economy and ensure an adequate reserve margin, 20 GW of additional generation capacity is required by 2020 and up to 40 GW by 2030,” said Lakmeeharan. He added that there were no immediate signs that this would be coming from renewable-energy sources.
He added that the medium-term outlook for Eskom indicated that up to 40 coal-mining projects needed to be brought on line to meet the demands of petrochemicals group Sasol and local and international markets. It was estimated that Eskom’s coal requirements would be between 180-million tons and 200-million tons a year by 2018.
“The role of coal-fired power stations will be based on choices made regarding carbon dioxide emission targets, the policy on nuclear and renewable energy, the development of clean coal technologies, and the creation of a pricing regime supporting a sustainable electricity supply industry,” said Lakmeeharan.
Although there were no immediate domestic supply concerns, XMP Consulting senior coal analyst Xavier Prevost reported that a few important steps needed to be taken to ensure the future of this supply.
“Finding and studying new coal reserve blocks to replace the production of some of the large collieries, which are to be closed by 2020, is imperative,” said Prevost.
He added that new reserves and mines were needed to supply additional coal exports through the Richards Bay coal terminal new expansion as well as the inland power-generation demand.
The majority of these new projects could be located in the coal-rich Waterberg region if sufficient infrastructural capacity is established. Reports indicate that the region hosts 11% of the country’s reserves and about 33-billion tons of resources.
Currently, the majority of South Africa’s reserves and mines are still located in the Central Basin, which currently boasts 22,8-billion tons of mineable reserves.
“Domestic sales are expected to increase to 150-million tons a year by 2020 mainly owing to new power- generation demands. Coal producers can expect an increase in prices to reflect this demand,” said Prevost.