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Insufficient coal lined up for power demands beyond 2016

Mpumalanga coal requires investment; Eskom’s in discussion with relevant parties – Brown.

South Africa’s state power utility hasn’t lined up enough coal supplies to meet its generation needs beyond 2016 in a country already suffering rolling blackouts.

Demand from Eskom Holdings SOC Ltd.’s power stations in eastern Mpumalanga province, where much of the fuel is produced, will in 2017 be 17 million metric tons higher than contracts so far agreed with coal companies, Minister of Public Enterprises Lynne Brown said Wednesday in an e-mailed reply to queries from lawmakers.

“The available Eskom-grade coal in Mpumalanga exceeds” 5 trillion tons, which is enough to meet demand, said Brown. “The coal is available in Mpumalanga. That requires investments and Eskom is in discussion with relevant parties.”

Eskom supplies 95 percent of South African power and four- fifths of that is generated by burning coal. The company is battling to meet demand after delays in building new power stations and as aging plants suffer from breakdowns.

Coal producers in South Africa including Glencore Plc and Anglo American Plc are scaling back output or selling stakes in mines as the price of the fuel slumped 22 percent in the past year.

Eskom has so far contracted 899 million tons for delivery from 2016 to 2030, Brown said. Some supply contracts need to be renegotiated, Khulu Phasiwe, a spokesman for the utility, said by phone.

©2015 Bloomberg News
 

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