South Africa’s Mineral Resources Minister Susan Shabangu on Wednesday reserved the right to take corrective measures to ensure that South Africa has sufficient coal for power generation, but backed off the widely expected step of declaring coal a strategic resource, and instead pleaded with the coal-mining industry to work with government to meet the expected Eskom shortfall.

Shabangu told the packed McCloskey coal conference in Cape Town that the growth of electricity demand in South Africa had resulted in the erosion of State power utility Eskom’s generation reserves, resulting in a shortfall of coal supply.

She said that the shortfall had been compounded by the global increase in the demand for coal, with countries such as India and China showing much interest in South African coal.
The lack of regulation of the South African coal mining industry, she said, had resulted in the power balance away from the national interest to that of the interests of the shareholders of the mining companies.

That had resulted in Eskom losing some share of its historical market.

“This has also impacted the quantity, quality and the cost of coal supplied to Eskom,” Shabangu lamented.

Despite strong calls to declare coal a strategic resource, Shabangu made it clear that it was not the intention of the government to “enter the minefield of specifying all the processes”.

“It is our fervent hope that the coal-mining industry will recognise the particular challenge and work with us,” she pleaded.

“As a regulator, we find it much easier to work as a collective, though we reserve the right to take corrective measures should the situation demand it.”

The Minister reiterated the commitment of the South African government to the free market: “Government’s commitment to the free market is beyond doubt,” Shabangu said.

“But our commitment to the betterment of society is also beyond reproach.”

She said that it went without saying that a balance had to be found between pursuing the principles of the free market while taking into account the needs of the country.

She gave notice that one of the agendas of government would be to “drive beneficiation rather mercilessly this year and into the future”.

This would not be done in an antagonistic fashion, but she hoped that the coal-mining industry would look at some of the possible beneficiation options.

In November last year, coal protagonists complained that South Africa’s coal was being burned wastefully without much regard for the myriad of other contributions that coal can make to the economy.

Coal consulting engineer Dr Ed Koper, who addressed the Fossil Fuel Foundation of Africa’s clean coal conference, in Johannesburg, last year, said that he believed that South Africa’s coal “squandering” should be brought to a rapid end, even if it meant the introduction of legislation to force the country to make the best possible use of coal.

Coal Wealth Botswana executive director Michael Nightingale, who addressed the same conference, concurred, saying that Southern Africa should begin to look at coal as “a miracle mineral”.

South Africa’s new Deputy Mineral Resources Minister, Godfrey Oliphant, who was at the same conference, said that advice would be taken from the Fossil Fuel Foundation about whether coal should be declared “strategic”.

Department of Energy deputy director-general Tseliso Maqubela said at the time that it was vital that the coal industry conducted its business in “a responsible manner”.

The new State mining, which will open its first coal operation in Mpumalanga this year, has also indicated that it will be providing coal to Eskom and functioning strategically as a coal supplier to help prevent future energy shortages.

Eskom has confirmed that its Duhva and Matla power stations, which have experienced relatively high coal-related load losses in recent years, have started receiving material in line with improved quality specifications agreed during recent contract renegotiations with suppliers.

The contracts were officially meant to come into force on April 1, 2011, but primary energy MD Dan Marokane has told Engineering News Online that Eskom had decided to accelerate their implementation and had already started buying in better quality coal in a bid to improve plant operations.

He praised the cooperation received from the coal miners supplying the two power stations, and revealed that load losses at Duhva had more or less halved from the peak losses of around 850 MW to 1 000 MW. BHP Billiton Energy Coal South Africa’s Douglas/Middelburg complex supplies the Duhva facility, which has a nameplate capacity of 3 600 MW.

At Matla, it was not possible for the tied colliery, operated by Exxaro, to offer the quality of coal sought for the 3 600-MW station. Therefore, additional coal was being brought in from other mines and blended with the Matla coal to reduce losses.
Eskom has been pursuing discussions with its coal suppliers on the issue of coal volumes and quality ever since the near collapse of the power system in early 2008, which led to a period of rotational load shedding.

The utility argued at the time that much of its plant underperformance could be attributed to load losses associated with poor quality coal, exacerbated by low coal stockholdings, as well as handling difficulties associated with wet coal.

The Duvha and Matla power stations were particularly affected, with the group reporting in its latest annual report that Duvha had accounted for 40% of total system losses, or 1,6-million MWh, in 2009/10, while Matla accounted for 37,6%, or 1,5-million MWh.

“We indicated earlier that we planned to accelerate some of our solutions around buying in better quality coal . . . and we have now implemented that plan and have seen positive results,” Marokane said.

South African coal protagonists are promoting coal as a provider of clean transport fuel and chemical feedstocks. Shabangu also spoke of coal's support in steel-making, cement manufacture and transport fuels.

Koper said that coal in a South Africa that lacked oil and gas was the country’s only form of hydrocarbon endowment.

“If we don’t use coal diligently, we’re going to suffer shortages or compensate for those shortages with very expensive imports,” Koper warned.

Nightingale’s message to coal miners was that they should stop wasting coal and take steps to make optimum profit out of the mineral, which he urged the continent to view in a completely new light.

“If we don’t treat coal as a crown jewel, we’re going to lose the game,” Koper said.

“Coal is the most valuable mineral, yet we rush to give it away and waste 63% of its value by burning it to make electricity,” said Nightingale.

Currently, all the 120-million tons of coal that South Africa burns in its power stations becomes carbon dioxide (CO2), which is blamed for the world’s climate change problem.

Last year, South Africa produced 250- million tons of coal and used 180-million tons of this coal locally; 60-million-tons-plus was exported.

However, both the quantity and quality of the coal reserves in South Africa are steadily declining.

The Waterberg

The main Witbank and Highveld coalfields still contain significant reserves and the upcoming Waterberg coalfield, in Limpopo, is largely untapped and has been touted as the next major coalfield to be exploited.

But there are challenges. The Waterberg fields have thick coal seams and are embedded in siltstones and shales. This means that the extraction will be harder and will require more input costs than in other fields.

The other major problem with the Waterberg coalfield is the geographical location far from industrialised locations, with very poor infrastructure. There is shortage of water, which is important as the beneficiation of coal and transportation facilities are limited.

Extracting coal in the Waterberg costs R300/t, twice the usual R150/t, says Oliphant, who adds that it is not only about how best to mine coal, but also about adding value to coal.
Oliphant says that coal is one of the country’s minerals that has been identified as a value adder in a host of industrial processes.

CCS presents an opportunity for energy regeneration

The processing sector, which wastefully leaves 12-million tons a year of ultrafines on slimes dams, should do something to exploit the sulphide-bearing minerals, particularly pyrite, which oxidises and gives rise to acid rock drainage.

Coal can do much more than contribute to primary energy supply and power generation.

Historically, the lower-grade coal was sold to Eskom for electricity generation but Eskom now faces the threat of this low-grade coal being sold to India and China, as its competitors.

For many coal-producing companies in South Africa, it is more lucrative to sell coal on the export market to India and China, in particular, than to sell to Eskom, resulting in Eskom losing some share of its historical market.

Eskom’s build programme will result in an increase in coal consumption to 160-million tons a year in 2020.