South Africa, a country that holds the sixth-largest coal reserves in the world, will need to invest up to 110 billion rand ($10.52 billion) in coal mining and dig at least 40 new mines by 2020 to meet growing demand, a coal specialist at the state-run utility Eskom said last week.

The country is reeling from a power crisis caused by a lack of generating capacity (see POWER, November 2008) To secure its future power supplies, the utility has embarked on a massive $33.6 billion infrastructure expansion program. Eskom’s ultimate goal was to deliver an additional 16,304 MW in generation capacity by 2017, with this figure doubling to about 80,000 MW by 2026.

The plan calls for a diverse portfolio of generating sources, including nuclear and gas. The utility also plans to revive three mothballed coal plants with a combined capacity of 3,800 MW, and it has begun construction of two coal-fired mega-plants, the 4,788-MW Medupi and 4,800-MW Kusile plants. This past December, however, the utility pulled the plug on a major $12 billion nuclear power project “due to the magnitude of the investment.”

New generation is now expected to be fueled by coal, which already supports 90% of the country’s power generation. Speaking at the Coal, Carbon and Energy Indaba hosted by the Fossil Fuel Foundation, Eskom’s chief geologist, Johan Dempsers, predicted that, assuming a 4% growth in South Africa’s electricity demand, the utility would have to increase production from 129 million tonnes last year to 200 million tonnes by 2018.

Exports are also expected to soar. Prior to 2006, almost all of South Africa’s 65 million tonnes a year of steam coal exports were shipped to Europe. But India has also become a key market for South African coal in the past three years, and India’s imports of coal are set to rise sharply to over 50 million tonnes in the next two years due to a rapid expansion of power generation.

Sources: Eskom, U.S. Energy Information Administration, Business Day