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COAL CONCERNS

15 Feb Mining

ESKOM ASKS DME TO SPEED UP MINING RIGHTS PROCESS TO EASE COAL-SUPPLY GAP

State-owned power utility Eskom has identified the long- term growth in coal supply as a significant challenge for future generation capacity.

Speaking at the McCloskey South African Coal Exports Conference. in Cape Town. recently, Eskom GM for primary energy generation Rob Lines said that the projected demand for coal for existing and new power stations, which would average 4% a year. far outstripped the projected production and supply of the commodity over the next decade.

Lines added that the current shortfall in the production of coal was already of concern to Eskom.

The projected demand for coal that Eskom would require this year was 125-million tons as well as an additional 11-million tons to ease the energy crisis South Africa was currently experiencing, said Lines.

However, he explained that there would be at least a 20-million-ton shortfall in coal production this year in terms of meeting Eskom’s demand. Should South African coal production growth remain at 3,5-million tons a year, this gap was expected to grow significantly to the extent that by 2017 the shortfall in production would grow to at least 60-million tons.

Lines linked part of the coal supply problem to the introduction of the Mineral and Petroleum Resources Development Act, which resulted in a drop in fixed investment in the mining sector because of the uncertainty created among investors by the new legislation.

However, mining investment began to improve in 2006 when the Department of Minerals and Energy (DME) began to issue new-order mining rights.

Lines stated that the looming increased shortfall in coal production meant that it was essential that South African producers began to mine more coal in order to avoid a sustained energy crisis.

However, he admitted that one of the primary factors inhibiting the production of more coal was the slow processing of mining rights, especially those of junior mining houses.

As a result, Eskom had set up a task team and had initiated discussions with the DME in an effort to speed up the process of granting new-order mining rights on certain coal projects.

Although Lines described this interaction with the DME as very delicate, he explained that Eskom simply could not condone the slow pace at which mining rights were currently being processed.

While Eskorn was keen to enter into new contracts with junior mining companies for the supply of more coal. Lines insisted that this would not be possible until the company had received its new-order mining right.

Adding to this statement, junior miner HCI Khusela Coal MD Fleur Honeywell stated that Eskom was the one entity that could assist junior companies in acquiring their mining licences.

Honeywell added that it was essential that Eskom assisted junior miners in acquiring their mining rights owing to the fact that these companies were in a position to supply more coal to Eskom immediately but could not because of the delays in being granted these rights.

Source: Engineering News – Jade Davenport