what can the waterberg achieve? - … can the waterberg achieve... · what can the waterberg...

What can the Waterberg achieve?

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1

Contents

• Global Coal market

• SA Coal market trends

• Energy demand and supply in SA.

• Alternative energy for SA

• Waterberg Coal field

• Exxaro’s development plan for Waterberg

• What’s happening ?

• Constraints

• Future potential



2

Strong Industry Outlook

2

4

6

8

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

•World Coal Consumption Continuing to Grow

(Bn tpa)

•World Power Generation Mix – Coal to Maintain Its Share2002

High Growth Low GrowthReference

Source: EIA

Source: IEA from ABSA

2030

2%

17%

19% 7%

39%

16%

Coal

OilGas

Nuclear

HydroOther

6%

9%

29% 4%

39%13%

Coal

OilGas

Nuclear

HydroOther

16,074TWh 31,657TWh

– Strong fundamentals for the local and global coal markets

– Significant power generation investments to be made in South Africa to meet demand following long period of underinvestment

• Electricity demand growing at 1,200MW per annum for the next 20 years, approximately eight new power stations will be required

• 89% of Eskom’s installed capacity iscoal-fired

– Coal’s share of global power generation expected to be sustained while total capacity continues to grow

– China continuing to drive global demand while supply constraints remain

– RBCT expansion will enable increased exports from South Africa

– Prices expected to recede but remain at high levels from a historical perspective



3

MARKET PRICES

Prices USD/T

0

20

40

60

80

100

120

140

160

180

200

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Years

US

D/T

HCCSSCCSteam API4Market Coke

• Global demand is driven by the Asian factor – a structural shift in prices foreseen on the long term

• Coal and coke prices coming off a high due strong demand and coke shortages

• Steam coal prices driven by demand and freight rates

• Commodity price rise due to weakened US dollar



4

RBCT EXPORT TERMINAL

• RBCT expansions announced Nov 2005

• Construction April 2006 to June 2009• 72 to 91Mtpa• 4Mtpa to small BEE miners•6Mtpa to SDCT•9Mtpa subscription to larger BEE companies

•Exxaro will have 6.3Mt



5

AFRICAN ENERGY OUTLOOKPOWER GENERATION MIX

• The expected increase in the contribution of natural gas for the generation of electricity in Africa is even more marked than for the world in total

• Contrary to expectations in some quarters, the IEA does not expect that the hydro-power contribution will increase, although the absolute volume is forecast to increase by 50%

• Persons without electricity:Africa 598,200,000 China 536,000,000

• Africa energy needs to treble by 2030 !!

Other0%

Oil12%

Hydro24%

Coal63%

Nuclear0%

Gas1%

1971

Coal47%

Oil13%

Gas22%

Nuclear2%

Hydro15%

Other1%2002

Coal29%

Oil9%

Gas52%

Other2%Nuclear

1%

Hydro7%

2030

90Twh

480Twh

1583Twh



6

SA energy outlook: electricity generation capacity

Source : Eskom

• Due to a long hiatus in electricity generation capacity investment during the last decade or two, a significant backlog has developed

• Considerable investment will be required in the decades ahead with an expected concomitant impact on prices



7

The cost of future energy production

• The crux of the debate – what will the future production costs of the different types of primary energy be?

• Fossil fuel derived energy will be with us for years to come……..

Source : IEA 2005



8- 5.00 10.00 15.00 20.00 25.00

DenmarkItaly

AustriaPortugal

JapanIrelandFrance

SwitzerlandGermany

UKHungaryFinland

SlovakiaSpain

GreeceMexicoPolandTurkeyCzech

USChinese Taipei

KoreaNorway

AustraliaSouth Africa

US c/kWh

Industry Households

COSTS OF ELECTRICITY - WORLDWIDE



9

89%

4%

5%

2%1%

Coal-fired

Nuclear

Pumped StorageHydroOil-fired

South African power generation mix

Eskom’s installed power generation portfolio Total installed capacity : 39,154 MW

Source: Eskom website

Eskom95%

Munics5%

Source: South African Coal Statistics, 2001

Installed capacity in SA (41 086 MW)



10

Alternative forms of energy ?

• Hydro Electricity

• Nuclear

• Solar

• Wind

• Coal bed methane/LNG

• Fuel Cells

• LPG Gas

• Bio Mass

Inga?



11

• Massive potential for hydro electricity (40 000 MWe) in the Congo river

But• Political instability• Massive infrastructure needed

for electricity generation and distribution (it’s a long way from Coega!)

•high capex•long lead-time

The Inga potential…

IngaInga

Will come to fruition only in Will come to fruition only in 55--20 years from now20 years from now



12

Nox pollution image of world showing Loyd’s blanket in Highveld

The expansion of electricity generation in the MpumalangaHighveld and Gauteng will be limited due to pollution levels.

Source: &Source: &BeeldBeeld (13/10/04)(13/10/04)



13

Where will all the Coal come from??

0

50

100

150

200

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

Coa

l (M

t per

ann

um)

Arnot

Hendrina

Matla

Kendal

Duvha

Tutuka

Majuba

Lethabo

Matimba

Kriel

Demand

Very ExpensiveCoal (if available)

Arnot Depleted

Optimum StopsMatla Depleted

Duvha PS stops(50 years old)

Demand Growth @ 2.5% per annum

Kriel Depleted

AVAILABILITY OF COAL TO ESKOM'S POWER STATIONS(CURRENT SOURCES)

Where will all the coal come from?Where will all the coal come from?Source SACRSource SACR

Source: Year reports, SA Coal Report



14

The Waterberg ………….



15

Zoetfontein Fault

Daarby FaultCurrent Pit

Botswana

Deep Coal (250m below surface)

Open Pit Mine-able Coal

Eenzaamheid Fault

Fault Bounded by•Zoetfontein fault along the Northern side•Eenzaamheid fault along the Southern boundary•Daarby fault divides the coal field into open-pit mineable and underground mineablereserves•Stretches 40kms from N to S and 88kms E to W.• Extends Westwards into Botswana•More than 40% of the remaining coal resources in RSA

The Waterberg Coal field



16

I NFERRED

I NFERRED

MEASURESD

I ND I CATED

I ND I CATED

Grootegeluk mine area

DaarbyDaarby FaultFault

EenzaamheidEenzaamheid FaultFault

Current PitCurrent Pit

4040-- year pit layoutyear pit layout

Reserves in Reserves in excess of 400 excess of 400

yearsyears

InferredInferred

InferredInferred IndicatedIndicated

MeasuredMeasured



17

Phase 1:Brown fields expansion of current Grootegeluk coal mine near Lephalale with Medupi power station (2100 to 4200MW).Products (coal tons pa):

- 8.0 mt to Power Station ,phase 1- 8.0 mt to Power Station , phase 2 - 900 kt to other markets

Time-frame: 2009 t0 2015

Phase 2:Green fields expansion with a new coal mine and a new coal-fired (clean technology) power station (4200MW).Products (coal tons pa):

- 24 mt to Power Station (FBC)-Time-frame: 2013 to 2017

Phase 3:Green fields new coal mine for exports nearby Lephalale.Products (coal tons pa):

- 10 mt for exportsTime-frame: in 6 to 10 years

Other Downstream Opportunities:Char in constructionMarket Coke in FSActivated CarbonCoal Liquifaction (Diesel)

Exxaro’s development plan for the Waterberg…



18

GEOLOGICAL PROFILE

16.5

7.56

9.37

6.53

9.04

10.15

13.50

6.54

3.204.105.703.708.204.104.30

AVERAGE THICKNESS (m)

OVERBURDEN

ZONE 11

ZONE 10

ZONE 9

ZONE 8

ZONE 7

ZONE 5

ZONE 6

INTERBEDDED SCZONE 4

INTERBED SCINTERBED SC

ZONE 3INTERBED SC

ZONE 2

ZONES

BENCH 1

BENCH 2

BENCH 3

BENCH 4

BENCH 5

BENCH 6BENCH 7a

BENCH 7bBENCH 8

BENCH 9a,bBENCH 10

BENCH 11

Upper Ecca:Bright Coal with inter-

bedded shale

Lower Ecca:Dull Coal, Sand stone

and Carbonaceous shale

•• Total resources in Total resources in mineral rights area: mineral rights area: 6.016Bn tons6.016Bn tons

•• LOM >75 yearsLOM >75 years



19

Grootegeluk – Overall process flow

Iscor

Steel

BENCH 1

GG 1

POWER STATION

COAL

SEMI-SOFTCOKING

COAL 10% ASH

WASTEDUMPS

MET.PRODUCTS

GG 3

BENCH 2

BENCH 3

BENCH 4

BENCH 5

BENCH 6GG 2

BENCH 7

BENCH 8

BENCH 9ABENCH 9B

BENCH 10

BENCH 11GG 4/5

PCI PRODUCT 10% ASH

Export

Matimba

SaldanhaSteel

LocalDuffPeas

Small NutsLarge Nuts

MittalGG6



20

GG 6 Beneficiation plant



21

GG 6 plant commissioned



22

22Medupi

Matimba

Grootegeluk

MEDUPI PROJECTGeographical

Layout



23

MEDUPI PROJECTPit Layout



24

MATERIAL FLOWBENCH PLANT DESTINATION 24

BENCH 7b

BENCH 11

BENCH 1

BENCH 2

BENCH 3

BENCH 4

BENCH 5

BENCH 6BENCH 7aBENCH 8

BENCH 9a,bBENCH 10

GG1

GG2

GG3

GG4/5

Export

Iscor/ ICC

MatimbaA

Saldanha

Local

SSCC10% Ash

PowerStaton Coal

PCI10% Ash

MET.Coal

GG6

GG8

MatimbaB

GG7

PowerStaton Coal

Small NutsDuffPeas

Medupi

Mittal



25

ROM production……..25

6 PACK: Mining Tons per Bench / Year

0.00

20.00

40.00

60.00

80.00

100.00

120.00

07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Tons

.

Bench 1 Bench 2 Bench 3 Bench 4 Bench 5 Bench 6 Bench 7A Bench 7B Bench 8 Bench 9A Bench 9B Bench 10 Bench 11

107mt ROM



26

Phase 1:Brown fields expansion of current Grootegeluk coal mine near Lephalale with Medupi power station (2100 to 4200MW).Products (coal tons pa):

- 8.0 mt to Power Station ,phase 1- 8.0 mt to Power Station , phase 2 - 900 kt to other markets

Time-frame: 2009 t0 2015

Phase 2:Green fields expansion with a new coal mine and a new coal-fired (clean technology) power station (4200MW).Products (coal tons pa):

- 24 mt to Power Station (FBC)-Time-frame: 2013 to 2017

Phase 3:Green fields new coal mine for exports nearby Lephalale.Products (coal tons pa):

- 10 mt for exportsTime-frame: in 6 to 10 years

Other Downstream Opportunities:Char in constructionMarket Coke in FSActivated CarbonCoal Liquifaction (Diesel)

Exxaro’s development plan for the Waterberg…



27

Downstream value generation

Exxaro Exxaro



28

Sintel Char project



29

Char plant in construction…



30

And progressing….

Commissioning Nov 2007



31

PROJECTED COAL PRODUCTION

0

5

10

15

20

25

30

35

40

45

50

Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13

Tons

per

ann

um (m

illio

ns)

CokingSteamEskom

Phase 1 GG6

Phase 2

Phase 3

P 3 could be moved

earlier

Coal production volumes

2006 Production

18,5mt !



32

Grootegeluk Expansion

Rail capacity

Projected Waterberg Rail Requirements (May 2007)

0

2

4

6

8

10

12

14

16

18

20

22

24

26M

illio

n to

ns

Exxaro "Probable"

Exxaro "Bankable"

Kumba "2005"

Exxaro "High"

Exxaro "Probable" 4.2 4.2 4.6 5.4 6.7 7.2 7.8 12.5 17.4 18.1 18.6 19.6 20.1 20.6 21.1 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6

Exxaro "Bankable" 4.2 4.2 4.6 5.4 6.7 7.2 7.5 12.0 16.4 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6

Kumba "2005" 5.5 6.2 6.2 6.4 6.6 7.6 8.6 9.3 9.4 10.9 15.9 15.9

Exxaro "High" 4.3 4.3 4.7 5.5 6.9 7.3 8.0 12.1 16.6 20.9 21.6 22.8 23.4 24.0 24.6 25.2 25.2 25.2 25.2 25.2 25.2 25.2 25.2 25.2

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030



(March 05)

Grootegeluk

Thabazimbi

Northam

RustenburgPyramid-South

Pretoria Greenview

Sentrarand

Witbank

Blackhill

WelgedagDelmas Ogies

HawerklipSaaiwater

Broodsnyersplaas

ERMELOHamelfontein

OvervaalPanbult

KempPiet Retief

Paul PietersburgMahulumbe

Sikame

Vryheid Vryheid-East

S W A Z I L A N D

Lenjanedrif

EnqolothiNsese

RBCTTo Empangeni

To DurbanElandslaagte

GlencoeHattinghspruit

DannhauserBallengeich

Ngagane

Talana

Volksrust

NewcastleUtrecht

Trichardt BethalTo Springs

Halfgewonnen

To Germiston

Twistdraai

Leeuwpan

RAIL INFRASTRUCTURERAIL INFRASTRUCTURE

= COAL Line = General Freight

AAAAA = GG Destinations

Kelty/Leandra

Van der Bijl

Rustenburg

RBCT

Saldhanha

Technical options identified ie electrification etcCosting in progress



34

Alternative rail routes…



35

Conclusion

• Development plan on track

• Infrastructural constraints being addressed

• Downstream projects on track

See you in the Waterberg !!!!!



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