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Eskom needs long-term coal supplies

Eskom’s Arnot power
Johannesburg, South Africa — MININGREVIEW.COM — 14 September 2009 – The South African power utility Eskom faces considerable pressure to sustain its long-term coal supplies, says chief executive Jacob Maroga.

"Now we are doing the long term and it is by no stretch of the imagination complete. It is still a big issue. The whole issue of the availability of coal in the long term is significant in terms of price and logistics,” he added.

Reuters reports that the global economic crisis badly hit the utility’s ability to borrow, and Eskom was forced to buy coal on more expensive short-term contracts to boost supply during last year’s crisis. Eskom is on record as saying that the country would need to invest up to R110 billion in coal mining by 2020, and to build at least 40 new coal mines in that time.

Eskom “’ which provides 95% of the country’s power “’ has been battling an electricity shortage since January last year, and has applied for a 34% increase in tariffs to build new power stations to plug a supply shortfall.

South Africa is one of the world’s major coal exporters, but regular train derailments and delays along the Richards Bay coal line have dented business confidence in freight logistics group Transnet’s ability to meet international commitments.

“We now have 40 days of coal stockpiled and we haven’t had load shedding since April 2008,” SAPA news agency quoted Maroga as saying.

To fire its power stations, Eskom will require 180 to 200 million tonnes of coal a year from 2018, up from 120 to 130 million tonnes at the moment. In August, Eskom reported the biggest full-year loss in the company’s history, and warned that power supply was still tight despite a decline in usage.