PETER BRUCE: Eskom, throw this idea at the wall and see if it sticks

I’m going to keep this short but, given the row about moving Eskom from the department of public enterprises to minerals & energy, I have some actual facts worth throwing into the debate. Well, in truth, there is no debate, just some political posturing. You cannot move Eskom to energy because it is a coal-fired monopoly and minerals & energy is there to diversify our sources of fuel for a cleaner energy future. A move, in the highly unlikely event it were ever to happen, would probably be illegal.

But I wanted to write something especially for minerals & energy minister Gwede Mantashe and the trade unions agitating against the energy policies adopted by the present government. And for the new Eskom CEO, André de Ruyter. It is one final column from me about coal slurry and the crying shame that we have enough to supply all of Eskom’s coal requirements for about 17 years (at current burn rates) without digging up another single rock of it. And we have totally ignored the opportunity.

Listen here, one last time. The fines in the slurry ponds at all of our coal mines are about 2-billion tons in weight. The technology to briquette the fines exists. And the briquettes work. And Eskom’s senior management know it and they won’t use it.

We know that coal contracting has become a corrupt business and that there are big vested interests in maintaining the status quo, especially as it’s mainly at Eskom’s expense. But you could buy the briquetted coal at a fraction of the average price Eskom is paying for coal today. The savings would take the pressure off labour, which could work in a “just transition” as the slurry ponds are depleted and cleaned and rehabilitated. Mpumalanga from the air today looks like a battlefield, it is so scarred by the coal industry.

The savings would also transform Eskom’s balance sheet and lift the burden on the state and on the rest of us. If you were an accountant, you could put the slurry on Eskom’s book as an asset.

The coal industry has talked about briquetting coal for ages. The problem has always been that the briquettes don’t bind well. They fall apart in the rain. Until now. A South African, David Hume, has developed technology and a binding agent that works. It is right under our noses. I have hawked this around the top echelons of government and Mr Mantashe you, sir, are my last chance.

Seriously, how does a solution to Eskom’s coal and cost and debt problem right on our doorstep sound?

I’m going to show you a transcript of a presentation made in the winter of 2016 by Chris van Alphen. He is the chief fuels adviser to Eskom. In other words, of you want Eskom to buy your coal, he’ll tell the management whether it’s any good and in which power stations to burn it.

Back in 2016 Van Alphen had tested some briquettes. They’d been brought to him by one of our coal majors, South32, which had seen Hume’s technology and his binding agent and which had the clout to get Van Alphen to pay them some attention. South32 gave Van Alphen some of Hume’s product. He presented his findings in PowerPoint,, which I don’t have. But here’s a transcript of what he said:

“… The principle of pelletising fine coal works … I just threw it against the wall after four days in the water and it dried out … and it did not break … Which is a fairly good sign … OK? … We had burnt your pellets …. we did … at that time the source was a … the … umm … [Hume: “Wescoal”] … Wescoal source … We did a combustion test … we weren’t really interested in the … what we were interested in is ‘did pelletising the fine coal change the combustion characteristics at all?’… and more importantly, ‘how did it mill?’ Because there is a concern that if you now make this a hard rock and it’s very, very hard, … does the Hardgrove index go up … and you can’t really mill it? … OK?

“What we found was that … umm … it actually improved the combustion marginally … because we found that with fine coal, because we had the original fine coal material, because it’s so difficult to handle that fine coal as it is … it sort of hampered the combustion … it did not really facilitate … because getting it into the mill was a problem … it was an issue … but as soon as you pelletise it … that handle-ability [problem] goes away … and it makes life a lot easier.

[Pointing to the PowerPoint photo] “… Those are the seven briquettes (pellets) … after being soaked for a day … they do not lose their shape … I even picked up one and dropped it from a height of 1.8m … and it did not shatter … [inaudible] … it did not come apart … I just took it and threw it against the wall, which is unprecedented and not the standard method … [smiles] … But I decided to do the wall!

“I did get the sense that these were … I always stop when I get to the waterproofing of the pellets … but these are pretty good … And strong … which is good … it’s what we want … OK? We’ve always been concerned that in the summer months the pellets would break up … which is what we have tested in the past. I do believe that these are very robust and we can supply them right through the year.

“What’s important is that Eskom knows we can burn coal … in a power station … but we didn’t know that we can burn pelletised coal … and that’s why it’s the most important thing that we have to do this trial too … if we can show them we can burn pelletised coal, using this technology, then to me it opens up … it’s another product … So if we get a new supplier who has fine coal … well I’ll suggest he go and talk to Coal 2 Char [Hume’s little company] … you make arrangements with Coal 2 Char to put a plant in … you then produce the product … And they then tender through a coal … Which is a fine coal pellet …. Produced by you … [Coal 2 Char] …

“You can put it at R30 less than the average coal price … Eskom will take it … Probably … Good chance they will take it … as long as the qualities are good, they’ll take it! … You’ll probably find their costs to produce that [money] is nowhere near … is nowhere near … they could even put R60 … R70 on that and they are still making good money … and that’s going to be our point of view … It’s price! … from the quality side we are happy with it … we are happy with the technology … OK? … as soon as they [the vendors] start getting greedy and putting that price up … I can tell you … I can guarantee that Eskom will come and say: ‘Forget it!’”

So, there you have it. Eskom’s chief fuels adviser says to South32 and to Hume “from the quality side we are happy with it” (the briquetted coal).

Hume spent a lot of his own money developing the technology to make and bind the briquettes. He has more than once told me he’d be happy to share the technology with anyone. But he has exhausted his financing. He managed to get one desultory meeting with some Eskom managers last year but was told it was all too complicated. A formal tender would need to be issued and before that an initial tender was actually issued inviting others to submit their briquettes for Van Alphen to test. Again. That was back in October. There has to be a tender, Van Alphen explained to Hume. You have to be fair to other possible suppliers.

There’s been some progress since then. Hume was shortlisted along with nine others after that initial tender, to supply Eskom with 6t of briquettes. But by then his run was over. His investors, tired of waiting for Eskom, had moved on and he has put enough of his own money into it. 6t is too far for a private guy on his own.

It’s four years since Van Alphen cleared briquetted coal fines as a suitable fuel for Eskom. He has had to be marched to this point and his bosses still don’t really believe the idea will fly. This time the testing will move beyond throwing the briquettes at a wall. There’ll be more practical tests, including handling, trucking over bad roads, simulated rain.

Afterwards it’s likely Eskom will select a few of the remaining nine participants and register them as vendors, or actual coal suppliers. After that happens (this is unlikely to all happen this year) they’ll be asked to supply 50,000t of briquettes each for an actual burn that Eskom, if it is still standing, will finally pay for. The board has actually approved. The words slurry and briquettes and binding actually got mentioned in an Eskom board meeting. I’m quite chuffed.

That test will be over in a flash though. A single generating unit at an Eskom six-pack power station burns 50,000t of coal in a day. But what will Eskom do if that burn works? How could it not overturn the entire industry, the debt, the costs?

Let’s assume that in a year Eskom burns briquettes and the sky doesn’t fall. There’s still 17 years of slurry out there. It’s an eyesore and a health and environmental risk. Could the state commandeer it? Expropriate it without compensation? All these mines by law maintain rehabilitation funds that roughly equate to the costs of cleaning up a mine. That’s what briquetting fines will do — clean up the ponds. Why could that expropriated slurry not be transferred onto Eskom’s balance sheet? Why could the mine rehab funds not be transferred to Eskom to fund the creation of an indigenous briquetting industry, the “just transition” the unions say they need?

Of course that all makes way too much sense. Coal is one piece of mining that black South Africans have made serious progress in owning. Is that now all to be lost? But we must consider the greater good. Why send men down dangerous mines when the product they’re digging for is lying waiting on top of them? In the sunshine. Waiting for Godot.