Anglo American Could Pull Plug On Eskom Coal Supply
Anglo American wants to withdraw its supply of coal to Eskom because South African Government requirements that Blacks must Own at Least 55% of all Coal Suppliers
It relates to the stubborn refusal by government that before New Largo, which is supposed to be the anchor supplier of coal to the Kusile power station, enters into a long term agreement with the owner, Anglo Inyosi Coal, 60% of the mine must belong to black owners.
This could have enormous consequences for the supply of coal to Eskom, because large investments would have to be done in new coal mines over the next five years in order to meet Eskom’s future coal needs.
In December 2014, after years of uncertainty, Eskom agreed with Anglo Inyosi Coal on a framework to prevent delays in building the mine from causing the power station to take even longer to go into operation.
The framework simply means that Kusile will obtain coal from New Largo. A final supply agreement will only be signed when Anglo Inyosi Coal is in control of black shareholders.
Shortly afterwards it was revealed that the first unit of Kusile could only supply power in 2017.
Mark Cutifani, CEO of Anglo, was diplolmatic when he announced on Friday that Anglo is withdrawing its supply of coal to Eskom.
It is good business, he said, but does not make a big contribution to their headline earnings. Anglo owns 63% of Anglo Inyosi and black shareholders own 27%.
“We are going to reduce our shareholding in the mines to less than 50%, including in New Largo,” said Cutifani.
Anglo will, however, not supply any financing or other support to increase the BEE shareholding.
“It will have to happen purely on a commercial basis.”
– News24 Netwerk24 and FinNews24