Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
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Coal quality<br />
Overview of <strong>Multi</strong>-<strong>Year</strong> <strong>Price</strong> <strong>Determination</strong><br />
2013/14–2017/18 (MYPD 3)<br />
Page 56 of 144<br />
The quality of coal is vital for efficient power generation. Poor-quality coal has greater ash<br />
content, reduced calorific (energy) value and more rock impurities. This damages coal<br />
handling and grinding equipment, reduces the efficiency of power plants, causes load<br />
losses, and increases emissions and the ash-removal burden.<br />
Mining conditions and coal quality in Mpumalanga have deteriorated in recent years because<br />
high-quality coal has already been extracted, leaving behind only poorer-quality deposits.<br />
Moreover, coal is now being mined in difficult geological areas. In certain instances there is a<br />
need for better mine performance. This is being addressed on an ongoing basis.<br />
Coal beneficiation (purification), blending and online quality-monitoring capabilities were not<br />
built into most long-term coal supply agreements, making it a challenge to maintain<br />
consistent quality in the coal supplied to power stations. <strong>Eskom</strong> has undertaken various<br />
projects to improve the quality and consistency of its coal, including online coal-quality<br />
monitoring and beneficiation at cost-plus mines. <strong>Eskom</strong> is also engaging with mining houses<br />
to ensure the timely supply of life-of-mine plans to enable better quality control.<br />
<strong>Eskom</strong> obtains its coal from a number of local mines and has negotiated supply contracts<br />
with new long-term mines that will come on-stream during the MYPD 3 period. These mines<br />
are expected to meet <strong>Eskom</strong>‟s projected demand for coal of the required quality up to<br />
2017/18. This includes the coal for power stations that will be commissioned within the<br />
MYPD 3 period. Stock days have improved and currently hover between 40 and 45 days.<br />
Coal handling refers to all activities necessary to get coal to a boiler once it has been<br />
delivered to the power station. This includes stockpile maintenance and coal reclamation.<br />
The price of coal is influenced by the following factors:<br />
The recent boom in the coal-export market.<br />
The Mpumalanga coal basin is expected to reach peak production within the next<br />
five to 10 years and then decline sharply. When this happens, the difficulty (and<br />
cost) of mining coal is likely to increase sharply.<br />
Increased rates of coal burn have shortened the lifespan of mines.
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