Black gold to keep Eskom’s fires burning

2008-02-08 00:00

A year ago, almost to the day, minerals and energy watchers were questioning BHP Billiton’s commitment to the Richards Bay Coal Terminal project, the world’s largest coal-exporting facility.

At issue was a R1,1-billion phase five expansion project that would add 19 million tons to the current 72 million ton-a-year capacity, and that BHP Billiton was perceived not to share the enthusiasm of the country’s other major coal players — Ingwe Collieries, Anglo Coal, Xstrata, Total Coal, Sasol Mining, Kangra Coal, and Eyesizwe Coal.

As it turns out, the company did dispose of a fraction of its take-up capacity to black economic empowerment entities, but certainly did not relinquish its dominance in the South African coal industry.

Twelve months later, and the company is reaping the profits of its prudence. So are the other players on the domestic front, some of whom are scrambling to get obsolete mines going again, others to break virgin ground, all with a singular mission to cash in on the voracity of Eskom’s furnaces.

Given the desperate need for more energy, and that coal accounts for 75% of primary energy consumption in South Africa, it is clear why the coal futures market is burning white hot.

So too is Eskom’s appetite for coal-fired power stations, perhaps because it knows no other way of generating power. Currently supplying 95% of South Africa’s energy requirements and two-thirds of Africa’s, its institutional matrix is deeply embedded in coal-to-electricity technology.

However, the R332 billion needed to upgrade capacity, and the five- to 10-year framework to build a power station, raises questions about the wisdom of this technology at the expense of investing in renewable energy.

Estimates suggest that the recoverable coal reserves in South Africa amount to about 55 billion tons, equivalent to nearly 11% of the world’s total. This figure excludes low-grade, high-ash content coal, which could add as much as 25% to the country’s total reserves.

Worldwide, coal reserves total more than a trillion tons, which could last 155 years. In a local context, Eskom still needs to source the cash for the construction of its giant Meropa and Bravo plants, and pundits believe that the utility may have a problem finding the funds.

Not that the utility will encounter any problems from government, judging by the dismissal of objections to a privatised peaking power station near Shakaskraal, 70 km north of Durban. If anything, the pronouncements by Environmental Affairs Minister Marthinus van Schalkwyk suggest that dirty technology is here to stay, at least for the foreseeable future.

The proposed north coast plant will be fuelled by diesel or paraffin — at 225 tons per hour — to generate 900 MW of electricity, about half of what the Koeberg nuclear plant cranks out. Significantly, Van Schalkwyk rejected the objections, not on environmental grounds, but on the basis that there was a dire need for power plants to ameliorate the electricity crisis.

Little wonder then that renewable energy sources are not seriously considered as viable sources of energy.

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