South African coal will be brought to the United States next month to fire two electric plants on the Gulf Coast of Florida that are owned and operated by Gulf Power Co.
The Gulf Coast electric company will import 500,000 tons of South African coal for the year starting in April and 800,000 tons a year for the next nine years of a 10-year contract it signed with the Transvaal Coal Owners Association of Johannesburg.
By 1987, Gulf Power is to have imported 7.7 million tons of South African coal to make electricity in two of its existing plants and one it plans to build in the next five years.
"This is low-sulfur coal we're getting at a price more favorable than we can negotiate in the U.S.," said Clyde A. Lilly Jr., president of the Jouthern Co., which owns Gulf Power. "This is strictly a price arrangement."
It is also the first and only commercial one of its kind, mostly because the one fuel the United States has an abundance of is coal.No other electric company has bought South African coal, even though it is cheap and low enough in sulfur to be burned in compliance with strict state and federal clean air regulations.
Florida's restrictions on sulfur dioxide emissions are among the most strict in the United States. At the same time, federal regulations on air quality mandate that new power plants either install huge and expensive smokestack scrubbers that remover sulfates from flue gases or burn oil or coal whose sulfur content meets federal requirements.
Lilly said the Southern Co. contracted for South African coal after conducting a worldwide search for low-sulfur coal. He said the coal will be taken by ship from South African to Mobile, Ala., where it will be sent on barges through the Intracoastal Waterway to plants in Panama City and Pensacola on Florida's Gulf Coast.
The executive declined to disclose the price Gulf Power will pay for the coal except to say it will "be less than the $30 a ton we'd by paying (low-sulfur coal)." He said there are escalation clauses in the contract that provide for price increases in the next 10 years.
U.S. policy on trade with South African provides no buying restrictions, only selling ones. The States Department has banned the sale to South Africa of arms and military related items like aircraft and tank engines. Despite the ban, the United States enjoyed a $433 million trade surplus last year with South Africa, according to the State Department.