Are We Really Exporting Our Coal During The Current Eskom Crisis?

Rumours have been swirling since last year that we are selling off our precious coal to China. Is it true while we suffer from load shedding?
Jason Snyman
2019-01-09

Debt, mismanagement, corruption, unskilled workers, union strikes, neglected infrastructure and failing plants – Eskom has suffered a year of woes indeed. The very sustainability of the ANC parastatal (along with all the others, really) is questionable at best.

The power utility is buckling beneath the weight of R419 billion worth of debt, and despite generating R26 billion from operations in 2017, the company only profited R671 million. How is this possible? The rising cost of producing energy? A horribly bloated wage bill?

According to Business Day, the overall debt is expected to rise to R600 billion by the year 2021 if left unattended to. Eskom can’t afford this – it can barely afford its own operating costs, never mind the interest on debt. So, what choice does the government have but to bail the SEO out of this mess? Eskom has brazenly asked the state to shoulder R100 billion of its debt – paid for, of course, by the public purse.

All the while, Eskom workers are demanding a wage increase. With Eskom’s initial refusal to meet these demands, employees took to the streets, threatened other workers with violence and even caused damage to a couple of Eskom’s facilities. Plants were left unattended, leading to power cuts across the nation, and forced the company to agree to a 7.5% wage increase for 2018, 7% for 2019 and 7% for 2020.

Now, South Africans have found themselves twiddling their thumbs at home in the dark or caught in peak traffic gridlock during load shedding. Why? Minister of Public Enterprises and man-with-the-absolute-worst-job-in-the-country, Pravin Gordhan, has attributed the power cuts to maintenance and repairs being carried out in power stations and plants.

But, of course, Reuters released a report back in September saying that the main reason for the load shedding could be due to a massive coal shortage – stating that Eskom had less than twenty days of coal stockpiled in only 10 of its 15 plants.

Eskom denies this. And recently, Twitter was burning to the ground with reports of 7.2 million tons of our coal being shipped over to China aboard 36 ships leaving Richards Bay.

Is this true? Are South Africans suffering the staggering incompetence of our government for no good reason? Are we really selling off all our coal during a coal shortage crisis? Let’s take a look.
 

The Reports

Now, the most important thing to remember here is that there has been no official report on this story, and the majority of it has sprung from an outraged social media. The rumour mill, indeed, is all fire and brimstone. But could it be nothing but assumption? Or is it exactly as bad as it looks?

As the reports go, yesterday saw 36 Chinese ships crowding into the Richards Bay harbour to be filled with around 200 000 tons of coal, per ship.

Probably trawling up all our dolphins too, while they’re at it.

7.2 million tons in total will be leaving our shores, destined for Asia, while the people of South Africa are sitting without electricity.
 

Speculation begins to circle Ramaphosa’s government, and the people are wondering if our country isn’t being sold off to the highest bidder at the expense of its citizens. Is the story of repairs and maintenance nothing but smoke and mirrors to cover the fact that we’re selling all our coal? To make things even worse, it was also reported that all air traffic has been restricted over Richards Bay. That doesn’t look very good, does it?
 

Maybe we’re selling off our shoddy, low grade coal? We do that, after all, and that’s nothing new, But reports also indicate that the coal being shovelled into the Chinese chips are in fact Grade A Anthracite coal. The type of coal that people die for. The type of coal our environment dies from. The lifeblood of our out-dated, inefficient Eskom energy grid. 

What fresh exploitation is this, ANC? 

Is There An Explanation?

CapeTalk Radio spoke to mining analyst, Peter Major, to find out if there is any truth to these rumours. According to Major, South Africa exports around 77 million tons of coal each and every year – to China, India and Japan, Europe and New Zealand – and the truth of the matter is that the 36 ships hanging around in Richards Bay are probably from all over the world – not just China.

“We've been exporting 77 million tons of coal for years, and there is plenty of coal for Eskom,” said Major. “If we say Eskom is more important than exports, that's fine, but which of the 77 million tons of coal do we say we are going to stop exporting?”

According to Major, it just doesn’t make any sense that South Africa is experiencing a coal shortage. After all, for years our country has had the seventh largest coal reserve in the world. As Major puts it – the current situation is not a coal problem, but a management problem.

Major further went on to state that the Eskom power plants are designed to use low-grade coal, freely available right next to these plants, and that the Grade A coal being exported cannot be used by Eskom.

Though this sounds idiotic at first, it does make sense. Eskom was designed to run on low-grade (brown) coal so that we can export our best coal and make a tidy profit. It’s a well-documented source of income for mining houses, and it’s just clever business. Eskom itself has nothing to do with the exports, and this coal is predominately owned by independent mining houses.

Furthermore, it’s pretty common knowledge that the Richards Bay Coal Terminal was built way back in the 70s for this exact purpose – to export coal – and is still owned by different mining houses, such as Anglo. It is one of the largest coal terminals on the continent and it certainly did not just suddenly begin exporting massive amounts of coal a couple of days ago.

“It is a bit of a red herring to say that our exports are starving Eskom, or that we are freezing in the dark because we are exporting coal to China. That is a fallacy.”

That’s right, social media, just settle down a little bit. Yes, everything in this country is eventually going to fall apart and go to hell in a hand basket, but not on this day.