Anglo: Eskom may run out of coal

Johannesburg - Power utility Eskom could run out of domestic coal in the long term if there is no infrastructure development, the head of Anglo American [JSE:AGL] regional strategy Ian Hall said on Tuesday.

Speaking at a Coaltrans SA conference, Hall said new, largely underdeveloped coal resources in SA - the Waterberg, Tuli in Limpopo and the Soutpansberg - needed adequate infrastructure if they were to be tapped.

"These are large resources but they are pretty much stranded in terms of infrastructure," said Hall.

He said that while Eskom generally used 20 megajoules (MJ) of coal, if there was no further investment in the central basin that provides its coal and no infrastructure linking new sources of coal "Eskom could run out of domestic coal".

Eskom also sees export of coal as a risk to domestic supply.

Should Eskom change its coal grade or mix of coal used in its power stations, it might call on local producers to supply coal they usually export. Exporters could also start exporting lower grade coal depending on the price.

Hall said Eskom has estimated that R100bn of mine investment was needed before 2020 if it was to meet its supply needs.

But even for the exporters, there was clearly a "disconnect" between export production, rail and port capacity, said Hall, adding that SA needed investment in new corridors.

"The market is there, we have the resources. The question is how do we put it all together to optimise our potential as a region," he said.