Johannesburg — AN INVESTMENT of between R90bn and R110bn will be needed in SA over the next 10 to 12 years to build about 40 new coal mines to meet projected domestic, power station and export needs, says Eskom chief geologist and coal specialist Johan Dempers.

But Wood Mackenzie senior coal analyst Xavier Prevost said the number of new mines would probably be greater than 40, although the volumes would be the same, because more small coal mines were coming on stream.

Nine new mining projects were launched in 2007 and 11 last year, he said, although some had now been frozen.

Dempers told the Coal, Carbon and Energy Indaba hosted by the Fossil Fuel Foundation yesterday that Eskom's strategic planning exercise conducted last year showed Eskom would need substantially more coal by 2018 to fuel re-commissioned and new power stations. Assuming 4% growth in SA's electricity demand, Eskom would have to increase its coal consumption from 129-million tons last year to 200-million tons by 2018, while there was also projected growth in export capacity and the requirements of Sasol's coal to liquid Mafutha plant.

Taking into account both mine closures and new projects, there would be little excess coal production margin within 10 years, Dempers said.

Eskom's strategic plan required data on SA's coal reserves. Dempers is chairing the steering committee responsible for updating the coal reserves of SA and neighbouring countries. The last estimate, in 1987, showed SA had 121,2-billion tons of coal reserves, of which 55,3-billion were recoverable. Dempers said data would be compiled from the mining companies, the Department of Minerals and Energy, and from geological surveys of neighbouring countries. Confidentiality regarding data would be important, he said. The study would take about 22 months and he called for the support and participation of the mining sector because the information was important for planning.

Prevost said there had been changes in SA's coal sales and structure in the past few years. As a result of the recession, coal- mining projects that were too small to stand alone were being merged into bigger, viable projects. As BHP Billiton had closed or sold coal mines, it had been overtaken by Anglo Coal as SA's biggest coal miner. Last year, Exxaro and smaller black empowerment companies tog-ether accounted for more than 30% of SA's coal production.

Exports were still the biggest source of revenue for the coal industry and new markets were developing, Prevost said. In 2006, Europe accounted for 88% of SA's coal exports but in 2007 that dropped to about 63% as exports to Asia, and especially India, increased. The price of free-on-board coal exported through the Richards Bay Coal Terminal peaked at about $170/ton last year and has since fallen to $60/ton. Prevost doubted whether the price would return to historic levels of $20/ton as the cost of coal mining had also increased.

The biggest problem for SA's exports was lack of rail infrastructure to ports, Prevost said.