AFRICAN BUZZ
SOUTH AFRICA:
COAL IS CRITICAL
Coal suppliers need to deal fairly with government-owned
Eskom by seeking reasonable returns and not excessive profits.
High input costs to power generation, including coal, ultimately
cause higher electricity prices, which is detrimental to South
Africa's economy, said Menar Managing Director Vuslat Bayoglu.
Bayoglu was speaking during a panel discussion on how the
coal sector can assist Eskom in resolving its power generation
challenges at the inaugural Coal Industry Day in Johannesburg
on Wednesday (24 July 2019).
Bayoglu said that although none of Menar’s subsidiaries
currently have contracts with Eskom at this stage, they were
in discussion with the utility about offtake agreements, either
through existing operations and/or acquisitions of new ones.
He pointed out that the coal industry lacked both an industry
champion and a lobby grouping – this was despite the fact that
about 75% to 80% of electricity produced by Eskom stemmed
from coal-fired power stations.
Furthermore, he lamented the fact that, the largest coal miners
in South Africa, were not in attendance at the conference where
coal as a source of power was a major discussion. Eskom was
represented Dan Mashigo, a senior general manager.
“It is also very disappointing that industry bodies that are meant
to represent all commodities and miners have not been vocal in
their support for the coal sector,” Bayoglu added.
Eskom, as the state utility, has the mammoth task of providing
electricity to South Africa and its neighbouring countries as
everyone needs power. However, the utility receives no support
with regards to coal supply.
“It is easy to blame Eskom for its past failings, but the reality is
that we, as coal miners, need to support Eskom. We can do so by
providing it with the correct quality coal at a cheap price. Selling
coal to Eskom at inflated prices is self-defeating, as it has serious
negative financial consequences for the utility, and the South
African economy broadly,” Bayoglu warned.
He once again pointed out, that coal and renewable energy
sources were not in competition with each other, but instead
should be viewed as complementary power sources. However,
Bayoglu stated that renewables could not provide the national
grid with baseload, which is essential to providing the consistent
flow of power to households and industry; without which the
economy would come to a grinding halt.
“No one would tell Saudi Arabia to stop producing oil. The same
should hold true for South Africa and coal, as this is the source of
our baseload power generation.”
South Africa does not possess sufficient gas or oil resources,
nor does it have a fleet of nuclear power stations to adequately
provide baseload capacity. Therefore, the country’s cheapest and
most dependable form of baseload power supply remains coal.
In addition to the consistent supply of power that coal provides
the national grid, it also (directly and indirectly) employs about
700 000 people, according to research undertaken by The Fossil
Fuel Foundation.
“If we multiply this figure by ten (which is the average number
of people that are dependent on a single salary earner in South
Africa) then over 7 million people are dependent on the coal
sector for a living,” Bayoglu remarked, adding that this was
particularly pertinent given that South Africa is faced by a
record-high unemployment rate of 27.6%.
He said that while it was true that there were coal deposits in
neighbouring countries, it made no sense to seek out those
opportunities, when South Africa still had large minable coal
reserves that could be easily developed into low-cost, opencast
mines for the benefit of the country.
“South Africa has also invested billions into establishing world-
class infrastructure including 380 000km of grid to support the
coal industry, which neighbouring countries still need to develop
if they want to compete with South Africa,” stated Bayoglu.
He emphasised that moving out of coal into gas for example
would be a very expensive undertaking and not something that
South Africa could easily afford taking into account its already
constrained fiscus.
Vuslat Bayoglu, managing director at Menar.
“Coal forms part of South Africa’s national patrimony that needs
to be used to support the country’s economic aspirations,
which is undoubtedly underpinned by having a power utility
that is supplied correctly specified coals at the right price,” said
Bayoglu.
ANGOLA:
CHINA’S BIG INVESTMENT years. According to Licínio Vaz Contreiras, chairman of the
Angolan Export Investment and Promotion Agency (Aipex),
Portugal. With 12 projects valued at more than USD5.8-
million, Aipex is the second biggest investor in Angola.
China has directly invested in 15 projects across Angola in
the last year. This investment, worth about USD175-million,
makes China the biggest investor in Angola. The country has
gone through significant economic reform over the past two Vaz Contreiras says that from 26 June 2018 to 30 June 2019,
155 investment projects had been registered, worth a total of
USD2.489-billion. Most of these projects were in the industrial
sector.
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African Mining October 2019
www. africanmining.co.za