Exxaro looks to supply coal to South Africa’s Eskom

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Exxaro Resources, a coal and heavy minerals mining company, is looking to supply coal to state-owned power utility firm Eskom, which has been hit by supply shortages.

Eskom’s short coal supply poses a threat to the power supply in Africa’s most industrialised economy. The firm has less than 20 days of coal supply at 10 of its power stations, but supplies more than 90 percent of South Africa’s power and is one of the country’s most indebted state firms.

In an interview with Reuters, Exxaro’s CEO, Mxolisi Mgojo said “we have made offers to Eskom, they have from what I hear, approved those offers. The final decision is sitting with the Treasury to enable them execute those contracts”.

State-owned power firm, Eskom had earlier acknowledged it was trying to secure new contracts with companies to ensure it had enough coal. This decision was taken after a major supplier cut supplies.

Mgogo said Exarro aims to have short-term contracts with Eskom, as the miner already supplies Eskom’s Matiba, Matla and Medupi power stations. He said “we don’t want to get involved in long term 10, 20, 30 year type arrangements. We want to create the flexibility whereby when the opportunity makes sense for us to play short-term into the Eskom market we have the flexibility to do that”.

Khulu Phasiwe, Eskom’s spokesman said the power utility firm was working on signing new deals and was negotiating coal contracts with about 12 companies. He said “hopefully before the end of this month, we should be seeing the first trucks coming through to the stations that are affected. We are not in a position to mention them (the companies) but some of them include the main players in the market”.

Phasiwe said Eskom, which has a total national output of 45,000MW, needs 3 million tonnes of coal to close its deficit but was looking to stockpile a further 10 million tonnes.

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