The proposed independent coal-fired power station mooted for the Eastern Cape would have a "17%-to-21% advantage" over Eskom, the contracted local coal supplier Strategic Natural Resources (SNR) said on Wednesday.

London Aim-listed SNR COO David Nel told Mining Weekly Online that this advantage would be the result of Aim- and AltX-listed Independent Power South Africa (Ipsa) locating its proposed nigh 1 000-MW power station at the coast and making use of local SNR coal.

The advantage emanates from Eskom losing between 17% and 21% of power during the transmission of electricity from its inland power stations to consumers on the coast of the Eastern Cape.

SNR's proposed operation, which had already commenced moderate coal production, was 1 000 km closer than any other cheap fuel source in South Africa, Nel said.

Moreover, Eastern Cape's growing industrial market was crying out for lower-cost coal, which SNR would be able to supply.

While SNR's high-ash low-volatile anthracitic coal was not of a particularly high grade, Ipsa had committed to making use of circulating-fluidised-bed combustion (CFBC) technology, which was used prolifically by Electricite de France, and which was poised to lower both capital expenditure (capex) and operating expenditure (opex) at a new supercritical CFBC power plant being commissioned in Poland.

CFBC's capex and opex costs were 10% below those of the pulverised fuel (PF) boilers used by Eskom, Nel said.

"The brag is that fluidised bed technology can burn almost any grade of coal," he added.

In addition to better efficiencies than PF and chain-grate boilers, CFBC emitted negligible sulphur dioxide and nitrogen dioxide, the Eastern Cape already having low sulphur content.

SNR, which struck its deal with Ipsa in 2006, raised R45-million on Aim in 2007, after having used private funding to obtain new-order prospecting rights and begin exploration at Elitheni.

SNR began with a 9 283-ha new-order prospecting right, expanded that to 26 000 ha and, two months ago, submitted an application for an additional 26 000 ha, all of which is contiguous.

Of the 60 000-ha-plus area, 25-million tons of coal had been proven at Elitheni, located ten kilometres from Indwe and 90 km northeast of Queenstown.

"This will be more than enough for Ipsa's purposes, plus local markets," Nel said.

Two weeks ago, SNR submitted an application for an additional 119 000 ha, called project Indlovu, 60 km west of Indwe.

Indlovu would serve a yet-to-be-disclosed, but significant market.

Both of these areas were mined on a small scale at the turn of the century.

Of the total Eastern Cape coalfield, which was estimated at some 13 000 km2, SNR had 1 800 km2 in hand and in application.

"We believe we've identified the best of it," Nel said.

Ipsa's announcement that it intended increasing its power station capacity to 1 000 MW emanated from being able to find the correct boiler supplier able to deliver for end-of-2010 commissioning.

The first level of capacity would be 250 MW, requiring one-million tons of SNR coal a year, and the 1 000 MW, requiring from three-million to four-million tons a year.

Ipsa had not said when it would attain the 1 000-MW capacity nor where it would site the additional 750 MW.

On the Eastern Cape industrial market having to pay between R1 200/t and R1 600/t for high-grade coal, Nel said: "We will be able to offer significant savings."

Elitheni coal also had metallurgical properties, with 0,004% phosphorus.

"It's double-zero phos and low calcium oxide is perfect for the metallurgical industry. Yes, it has high ash, but we will wash that out," he said.

SNR was in discussion with Coega, which was putting up a metallurgical cluster.