Mining investment company Menar’s managing director Vuslat Bayoglu highlighted ways in which the sector could address some of its difficulties.
“Coal suppliers need to deal fairly with Eskom by seeking reasonable returns and not excessive profits. High input costs to power generation, including coal, ultimately cause higher electricity prices which are detrimental to our economy,” he said.
Bayoglu said the coal industry lacked both an industry champion and a lobby group although around 75% to 80% of electricity produced by the utility power stemmed from coal-fired power stations.
“It is disappointing that industry bodies that are meant to represent all commodities and miners have not been vocal in their support for the coal sector.
“Eskom as the state utility has the huge task of providing electricity to South Africa and its neighbouring countries. However, the utility receives no support with regards to coal supply,” he said.
He said it’s pointless to blame the power utility for its past failings, but the reality was that coal miners needed 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 economy,” he said.
Bayoglu said coal and renewable energy sources were not in competition with each other but should be viewed as complementary power sources.
However, Bayoglu said renewables could not provide the national grid with base-load, which is essential to providing the consistent flow of power to households and industry without which the economy would come to a grinding halt.
“South Africa does not possess sufficient gas or oil resources, nor does it have a fleet of nuclear power stations to adequately provide base-load capacity. Therefore, the cheapest and most dependable form of base-load power supply remains coal.
“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 has large mine-able coal reserves that could be easily developed into low-cost, opencast mines for the benefit of the country,” he said.