De Ruyter: Trucking of coal becoming expensive, conveyor belt transport more attractive | Fin24

Eskom CEO André de Ruyter.

• Eskom says ferrying of coal coal to power stations by conveyor belts is becoming more attractive.
• CEO André de Ruyter says the trucking of coal was increasingly becoming expensive, with rail as another alternative.
• Eskom recently signed a deal with Arnot Opco, which will relay coal to Arnot power station by conveyor belt.

Eskom CEO André de Ruyter says the trucking of coal to power stations is increasingly becoming expensive, with conveyor belts and rail becoming increasingly attractive.

Kusile power stations is one of the facilities that the power utility is considering feeding via a converter belt.

“There is a narrative that coal is abundant, and we do have significant coal reserves, but coal is becoming more expensive to transport,” De Ruyer told delegates at the Joburg Indaba on Thursday.

He said the resource which is largely used by the power utility to generate power was getting further and further away as the resources closer to power stations were depleted, making it expensive in the medium term.

“We first have to get coal on conveyors, rail and lastly by truck.” De Ruyter told the gathering of mining captains from around the world held annually.

Eskom is planning to decommission Camden and Hendrina as the utility begins to embrace renewable energy sources.

In August, Eskom signed a ten-year coal-supply contract with Arnot Opco, which is expected to feed the Arnot power stations by conveyor belt, a move that De Ruyter said was signified its intention of minimising road deliveries. 

Tegeta Exploration and Resources once fed coal to Eskom’s Hendrina power station before the company ran into legal and operation challenges, with its lucrative contract with the power utility declared unlawful. Tegeta, which was linked to the Gupta family, is currently under business rescue.

On government’s relaxation of self-generation regulation for industries, De Ruyter told the delegates that the power utility welcomed the intervention, although it would reduce Eskom’s revenue base.

“It is unacceptable that a lack of energy security in South Africa is a constraint of economic growth and certainly hampers investor confidence. By reducing or eliminating that constraint on investor confidence, we believe the economy will grow and demand for electricity will grow.”

Despite operational challenges, Eskom is fighting to reduce its staggering debt which stands at around R402 billion, a process De Ruyter said would require a cocktail of interventions, including the sale of non-core assets and equity injection cutting down on municipal debt.