Coal export fears ‘overstated’, says NPC’s Anton Eberhard

2014-02-11 13:53

The conflict between exporting more coal and securing Eskom’s supplies is overblown, according to Professor Anton Eberhard of the National Planning Commission (NPC).

International evidence is also weighing against South Africa expanding its nuclear generation capacity to meet future demand.

South Africa should be increasing coal exports to alleviate the balance of payments (the fact that we import far more than we export), Eberhard said while addressing a energy leaders round-table discussion, sponsored by the Central Energy Fund, this morning in Joburg.

“There is clearly an influence on the price, but it is overstated,” he said in relation to fears that higher prices driven by exports drive up Eskom’s costs.

“In the Waterberg it is not an issue,” he said, referring to the emerging new coal province of South Africa, which contains about two thirds of the country’s remaining coal reserves.

Government is currently introducing an amendment to mining legislation that allows for minerals to be declared “strategic” and their export limited, and local price set by ministerial decree.

It is commonly assumed the purpose is primarily to secure low-cost coal for Eskom – as well as iron ore for new state-supported players in the local steel sector.

Coal is among South Africa’s top three exports with platinum and gold, but export levels are constrained by Transnet’s inability to meaningfully increase rail accessibility to the Richards Bay Coal Terminal.

The reason coal exports aren’t a threat to local power supply, according to Eberhard, is that most mines being built or planned in the Waterberg will actually work best if they serve Eskom and the overseas market.

The mix of coal qualities that will be produced make it most advantageous to do both, he says.

It is also not yet certain that coal will indeed be declared a strategic mineral, he told City Press.

“The problem now is that there is not enough investment in coal and if you set the price, companies will not invest. We emphasise the synergies with exports.”

Eberhard also reiterated the NPC’s reservations about South Africa investing billions in new nuclear power stations.

The NPC “broadly supports” the controversial new update to the integrated resource plan (IRP) for electricity, which was released late last year for comment.

The updated IRP called into question the original 2010 plan’s view that significant new nuclear capacity is needed alongside other kinds of generation.

The reason is that local power demand is growing at a far lower rate than expected – and that the cost of building nuclear plants is escalating.

The “decision tree” for nuclear energy now reads that new reactors will be considered “if, and only if” electricity demand surpasses the threshold of 265kWh in 2014 or 270kWh in 2015 “and there is no expectation of large-scale gas development”.

The IRP update also says nuclear power will be shelved if the cost of new capacity rises above $6?500 per kilowatt of capacity.

Recent contracts to build nuclear plants in the US have cost $8?150 per kilowatt, while the Russian nuclear giant Rosatom is building plant at a cost of $7?031 per kilowatt, says Eberhard, indicating that conditions are leaning against new nuclear energy in South Africa.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.