Pretoria - South African stock piles to keep the lights on are at an average of over 40 days, says power parastatal Eskom.
"Current coal stockpiles are at an average of more than 40 days and approximately 95 percent of Eskom's requirements to 2018 have been contracted or committed," the parastatal's Chief Commercial Officer, Dan Marokane, said on Wednesday.
Marokane, who was speaking at a coal conference in Cape Town, said rail volumes have been increased and that quality management practices and contractual provisions have been improved. However, he said that Eskom faces substantial challenges to secure the long term coal supplies it requires for existing as well as new power stations.
"We have choices to make as a country if we are to find the optimal balance between coal exports and domestic energy security," Marokane told the conference. "We are concerned that the market on its own may not ensure that balance."
The parastatal has a plan of sourcing most of the coal required for existing power stations from the Mpumalanga province, although it does not have sufficient coal to supply Eskom under a 60-year-life-of-station scenario.
Meanwhile, risks to coal supply have increased because of delays in developing major long term sources. The strong demand for coal exports, including for those grades of coal which in the past were used only by Eskom, has put upward pressure on domestic coal prices.
"Our concern is that these risks will raise the cost of coal and so lead to increases in the cost of electricity that would have a negative impact on South Africa's economy. We want the export coal industry to thrive, but we must at the same time ensure that South Africa has the coal it needs to ensure that we can keep the lights on in the long term, at a cost that the country can afford," Morokane explained.
Marokane said Eskom was proposing that the country's coal resources be developed and exploited in the national interest.
"Coal is going to remain a significant proportion of South Africa's energy mix for a long time to come. We want to work in partnership with the industry and our stakeholders to secure the country's future requirements in a way that supports growth and development," he said.
