Dark days await SA as Eskom coal supply dwindles

While the Hawks hunt for Optimum coal mine owner Ajay Gupta, Eskom is looking for a way to keep the mine’s doors open as coal stocks fall.

If it doesn’t, Eskom could be lights out by Friday, according to an energy analyst.

“I’m nearly ready to start taking bets on that,” aaid Mining and Energy Advisory’s Ted Blom yesterday.

But if Eskom succeeds in keeping Optimum open, it’s not going to come cheap. Some reports have Eskom willing to pay up to R450 per ton of coal – a price that is unsustainable and double the going rate, and will make other suppliers want the same, Blom said.

“The equipment at Optimum mine has been ransacked,” he said. “Half of the dragline excavators are no longer operational due to their being cannibalised – the same with the haul trucks.”

Blom said much like the Aurora gold mine, which saw its assets stripped when it was taken over by Khulubuse Zuma and Zondwa Mandela, to recapitalise Optimum – owned by Tegeta Resources – could take up to R10 billion.

“Eskom needs the coal, which is why it wants to keep it open,” Blom said. Optimum is an opencast and underground coal mining complex, made up of Kwagga, Pullenshope, Eikeboom, Boschmanspoort and Koornfontein mines in Mpumalanga.

According to Blom, Tegeta provided an estimated 9 million tons of coal per year to the Eskom supply chain and, with operations now closed, Eskom is short more than 1 million tons per month.

Seven of Eskom’s power stations – Arnot, Tutuka, Majuba, Hendrina, Camden, Kriel and Komati – are below minimum national reserve levels of 20 days, as stipulated by the Grid Code.

“Although the current coal stock day levels of 35 days (excluding Medupi and Kusile Power Stations) are within an acceptable range, it is necessary to have all stations at the required stock day levels,” an Eskom press release stated.

“These include diverting coal from the power stations with a surplus to those with low coal stockpiles. Eskom is also in the process of signing new coal contracts to ramp up the delivery of coal to the seven affected power stations,” said Eskom spokesperson Khulu Phasiwe yesterday.

“Diesel generators are part of our fleet of power stations, but they are only used as a measure of last resort. The first prize is to get the coal stock levels to appropriate levels at the seven plants.”

Phasiwe said Eskom’s engagements with the Tegeta business rescue practitioners was to ensure coal delivery as soon as possible.

“In addition, our interest is in ensuring that the contracted quality and quantity of coal remain uncompromised in the midst of all the changes that may happen at the Tegeta mines,” said Phasiwe.

Eskom board members are currently in Washington DC, home of the International Monetary Fund. Contrary to belief, it is not a fund-raising trip, Phasiwe said.

“It’s about meeting and updating stockholders about measures taken, or being taken, to address their concerns they had previously raised around corporate governance issues,” said Phasiwe.

“Eskom will follow the National Treasury guidelines in signing any of these coal contracts. Some people are just throwing coal dust in the air to create unnecessary hype.”

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