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Issue link: https://coal.epubxp.com/i/123548
south african coal continued coal to energy production, using fluidized bed combustors. This seems increasingly unlikely, however, as Eskom has committed substantial capital on thermal coal generators and is moving ahead with large-scale nuclear and renewable generation. So as the clock ticks on the country's stretched energy supply, Eskom will have neither the time nor the money to toy with technology outside of mainstream thinking. In spite of its size, the South African coal industry is not a happy place right now. A slew of legislative changes are gathering like clouds on the horizon. "The real problem we are having at the moment is that we are waiting for the government to make many decisions," said Xavier Prevost, an independent coal analyst and one of the leading advisers to the industry in the country. Tax changes and the possibility of declaring coal a strategic resource, which could restrict exports and channel production to local power stations, are among the issues weighing on investors. "Making coal a strategic resource is not in itself bad—or good," Prevost said. "But people wanting to invest in mines need a big injection of capital. This is not being made available because of the lack of decisions." As a result, companies are hanging back, or directing their capital toward countries beyond South Africa's borders. Prevost said new projects have stalled because of legislative dithering. "I'm aware of 20 to 30 projects that are not doable. This is not because they are bad projects, but because of the uncertainty. And mines have a long lifespan. Investors are looking at up to 30 years for a project. If the government makes the wrong decision it will kill the investment." mine at Vereeniging in Gauteng Province. These are run on cost-plus, long-term contracts supplying 30 million mtpy of thermal coal to Eskom. The utility takes up 62% of Anglo's South African production. It has a 50% interest in the Mafube colliery and Phola washing plant. Six of the mines collectively supply 22 million mtpy of thermal coal to both export and local markets. The New Vaal, New Denmark and Kriel collieries are domestic product operations supplying 30 million mtpy of thermal coal to Eskom. Isibonelo mine produces 5 million mtpy of thermal coal for Sasol Synthetic Fuels, the coal-to-liquids producer, under a 20-year supply contract. Sasol uses around 8% of Anglo's production. Anglo American Inyosi Coal, a broadbased black economic empowerment (BEE) company valued at approximately $1 billion, is 73% held by Anglo American; the remaining 27% is held by Inyosi, a BEE consortium led by the Pamodzi and Lithemba consortia (66%), with the Women's Development Bank and a community trust holding the remaining equity. Anglo American Inyosi Coal, in turn, owns Kriel colliery, the new Zibulo multiproduct colliery and the greenfield projects of Elders, New Largo and Heidelberg. Around 28% of Anglo Thermal Coal's production is exported through the Richards Bay Coal Terminal, in which it has a 24.17% shareholding, to customers throughout the Med-Atlantic and AsiaPacific regions. Exxaro is the second largest coal producer in the country, with a capacity of 47 million mtpy. It has 11 managed mines that produce power station, steam and coking coal as well as char. All of its production goes to local power production. Exxaro is busy with the Grootegeluk Medupi expansion project (GMEP) in the northwest, which will supply Eskom with 14.6 million mtpy for the 4,800 mw coalfired Medupi power station, also under construction. Medupi is a dry-cooled, coal-fired power station which, when completed, will have six boilers each powering an 800 mw turbine, producing 4,800 mw of power. It is expected to become the largest dry-cooled, coal-fired power station in the world. Medupi itself is running two years behind schedule, and it looks as if it may slip even further behind. This will certainly impact GMEP's production output for the coming year, as it waits for its main client to issue first steam. The company has not escaped the rolling labor unrest that has beset much of South Africa's mining industry. In March, strikes stopped work at six of its 11 coal mines. Exxaro supplies one fifth of Eskom's generation and it was feared the strikes would collapse the country's already fragile energy supply chain. Sasol is the odd puppy in this litter. The company's primary focus is turning coal to petroleum and other chemical products, using the Fischer–Tropsch process. It provides about one-third of South Africa's fuel needs, and is rapidly expanding into gas and other fossil fuel derivatives. Mining is therefore a secondary activity, but with production running at 44 million mtpy, an important one nonetheless. Its subsidiary Sasol Mining is the third largest coal producer; most of this feeds the The Big Five Five majors produce more than 80% of the country's coal from eight super-mines that dig up more than 10 million mtpy each— the other 20% coming from various smaller operations. The largest is Anglo American's Thermal Coal division, with nine mines in the country. Four of these—Goedehoop and Greenside, which are opencast, and underground operations at Kleinkopje and Landau—are in the Witbank area. These produce mostly thermal coal for export. Anglo also runs three mines for Eskom— the Kriel and New Denmark mines in Mpumalanga Province, and the New Vaal April 2013 Coal-fired power stations provide 94% of South Africa's electricity, and this mix is unlikely to change anytime soon. (Photo: Siemens) www.coalage.com 59