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South Africa: Eskom Coal Own Goal
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Business Day (Johannesburg)
COLUMN
18 July 2008
Posted to the web 18 July 2008
Edward West
Johannesburg
THE good news from Eskom's results is that it does not anticipate any further power cuts this winter.
Unfortunately, that's where the good news ends.
In its annual report released yesterday, Eskom ominously notes that "low growth in SA coal production is of very great concern and poses a serious supply risk to Eskom and SA".
Eskom currently generates about 87% of SA's power from coal. This is not a new problem.
There are still big coal reserves in this country and there are even areas that are unexplored and which could yield substantially more.
No, the real reason behind the dwindling supply is the low pace at which the minerals and energy department is granting coal mining licences .
The big mining groups and scores of smaller black empowerment companies who've submitted applications for coal mining licenc es are affected by these delays, and are waiting to mine.
Coal mining is not as capital intensive as deep-level mining, and coal mines are relatively shallow. It is an ideal commodity to create additional employment in the sector.
If Eskom really is concerned about the dwindling supply, why not appoint a committee to investigate applications, and try to speed up the process of granting them.?
CEO Jacob Maroga's remark -- whether coal reserves should even be in private hands or whether there should be reserves tagged for Eskom -- unfortunately does not inspire confidence.
Does he propose Eskom resume coal mining, or that private companies be forced to sell at lower prices to Eskom?
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More clarity will be needed on this in future.
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