16 May 2007 - 11:51
  • News Code: 104806

European Union (EU) environmental rules could lead to a fall in South African coal exports from Richards Bay Coal Terminal, the world’s largest coal-export point.

The EU’s Large Combustion Plant Directive will limit the emissions of nitrogen oxides and sulfur dioxide.

On May 13, coal terminal executive chairman Kuseni Dlamini conceded the new EU rules were “an important directive with some implications for South African producers of coal“.

“But the EU is not our only market destination ... we have not yet got a considered opinion as to what impact (these rules) will have (on exports),“ he said.

UK authorities believe that South African coal tends to produce greater amounts of the oxide and dioxide during burning.

However, Dlamini said that despite the rules, he was still confident of “increased demand for South African coal“ as South Africa was “known as a reliable and predictable source of supply“.

South Africa exports about 60% of its 72-million tons of coal each year to the EU, although demand is growing from its second-largest market, Asia.

The coal is shipped through the terminal, which is pumping R1,1 billion into expanding capacity to 91-million tons by 2009.

But the expanded capacity could be unnecessary if other countries follow the lead of the EU.

At the weekend, Reuters reported that Drax, which operates Britain’s largest coal-fired power plant, will replace South African and Russian coal with that from Indonesia, Colombia and the US. Although Drax bought no more than 600000 tons of coal from SA in the past two years, the danger is that other companies may follow Drax’s lead.

The UK, for example, imported 12-million tons of coal last year, of which SA was the second largest contributor.

But while some UK companies such as Drax said they would stop buying South African coal, other large generators, including EDF Energy, RWE and International Power, do not expect to make a major change in their buying patterns.

Outside the UK, power generators in Germany, Scandinavia, Italy, Spain and Portugal said they did not expect the new EU rules to affect their purchases of South African coal.

Part of the reason for this is that many European plants have devices that remove sulfur and nitrogen oxides from the plant emissions.

By contrast, most UK plants do not have this equipment. However, as one UK source said, “It’ll be business as usual.“

Another source said, “It’s not a situation which is impossible to cope with.

“Even without (nitrogen oxide) burners, there are things you can do, adjustments which can be made at the plants, without rushing out and buying Indonesian coal.“

A South African coal producer, who asked not to be named, said it was too early to assess the effect of the rules on coal sales to the UK.

“I don’t think it’ll be felt anywhere else but it will have little impact overall on sales to the European market.“

The threat of lower EU sales could be compensated for, to some extent, by growing demand from Asia. Last year, India bought 3-million tons of South African coal, but this number is set to increase towards 10-million tons this year.

Dlamini said South African coal producers were actively investigating how to get cleaner coal energy, and were not just “sitting on our laurels“.

“The coal fraternity is not simply waiting to be regulated out of existence.

“We’re grappling with how to be a force of positive good (on clean energy),“ he said.

Dlamini said the coal industry signed the energy efficiency accord last year with the government and “we embrace these issues ... of safeguarding our environment“.

The Richards Bay Coal Terminal is jointly owned by South African coal producers including BHP Billiton, Anglo Coal and Xstrata.

 

PIN/ Allafrica.com

News Code 104806

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