Power crunch to last longer

Brendan Ryan

Johannesburg - Eskom's power crisis is seriously affecting the mining industry and may take longer to resolve than the country is being led to believe.

That was the sobering message given on Tuesday by two senior Anglo American technical executives at a conference on the power crisis organised by the SA Institute of Mining Metallurgy and the SA Institute of Electrical Engineers.

The assessments presented by Ian Morison, head of engineering in Anglo American's Technical Division and Gordon Smith - head of strategic long term planning for Anglo Platinum - stand in sharp contrast to the previous assessment given by Anglo CEO Cynthia Carroll.

Addressing the Indaba Conference in Cape Town in February, Carroll played down the electricity supply problems and, instead, launched an attack on commentators she termed "Afro-pessimists".

According to Morison, "Mining is absolutely reliant on continuous, adequate, reliable and secure electrical power for safe and healthy access to the working place.

"Eskom is currently unable to guarantee a secure electrical power supply to the mines therefore we are mining at risk."

Crisis

Morison said that, as a result, Anglo was installing "hundreds" of generators throughout its mines so that it could get workers up from underground under emergency conditions and so minimise that risk.

Smith added some 100MW of standby generating capacity was being installed on Anglo Platinum's operations alone.

Smith commented, "This is a crisis but it is not a gloom and doom situation because we have confidence in the government and in Eskom that the power will come. The question is when - and that's the risk factor."

According to Morison it could take a lot longer to resolve the situation than Eskom is predicting through its "new build" construction programme.

The first two coal-fired, base load stations are now under construction. These are Medupi near Lephalale in Limpopo Province where the first generating set is due to start up in 2012 and Kusile, near Kendal in Mpumalanga, where the first generating set is scheduled to come on stream in 2013.

Morison told conference delegates that the construction timetables for Medupi and Kusile are extremely optimistic and unlikely to be met.

If Morison is right, that has major implications for the country's overall power situation. Eskom CEO Jacob Maroga has previously stated Eskom will not be able to get on top of the power supply situation purely through its new-build programme until about 2014.

Various projects

Any delays to that programme will worsen Eskom's already grim outlook on its reserve generation margin in the period from 2010.

The reserve margin is expected to turn negative from the end of 2010 through to 2012 unless the country saves between 5% and 10% of the total amount of power it is currently consuming.

Morison said Anglo's projected growth to 2017 would require more than 1 000MW of additional power but Eskom was currently unable to supply in excess of 100MW of this.

The key question was what portion of this would Eskom be able to supply and what portion would Anglo be required to supply itself.

Morison said Anglo had "various short and long-term generation projects in various stages".

"In the short-term these include hired/equity partnerships using diesel/heavy fuel oil/gas fired generation in Southern Africa. Long-term projects include the possibility of coal-fired stations within South Africa."

But Morison pointed out construction of such independent power producer (IPP) and co-generation (co-gen) projects required reaching agreement with Eskom and that was not going well.

He commented, "We are not winning on IPP and co-gen. Negotiations with Eskom are proving very difficult, in particular negotiations over a fair price to allow entry into the (power generation) industry."

Asked at question time to elaborate on this Morison said the negotiations were taking too long.

"It's just not happening fast enough. We cannot delay developments for two to three years just to get an ideal solution," he commented.

Turning to the current power situation Morison said that Eskom's performance seemed to be worsening after achieving energy savings of between 4% and 6% earlier in the year. He said these had now dropped to very low levels.

"There appears to again be a trend of increasing load losses and the current month trend is worse than the historical trend. Planned and unplanned outage targets are difficult to reach and the 2008/09 summer is likely to be very tight."

Morison added, "I believe Eskom made a mistake when it suspended the load-shedding programme. Most South Africans took that as a signal that the problem had gone away."

- Miningmx.com

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- Mining MX