Andre Wilkens, CEO, ARM
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ARM Coal to up supplies to Eskom
Allan Seccombe
Posted: Mon, 18 Feb 2008

[miningmx.com] -- ARM Coal, which is in a joint venture with Xstrata in South Africa, will begin production at its Goedgevonden coal mine in 2009, with output of a million tonnes, half of which will be sold to Eskom, said ARM CEO Andre Wilkens.

ARM Coal also has capacity to increase the flow of coal to Eskom, but Wilkens was a little more coy about the timing and cost of this exercise.

The 6.7 million tonne per annum (mtpa) Goedgevonden thermal coal mine comes into full production by 2011, but will begin production at a million tonnes/year in 2009, Wilkens said.
we have capacity to make more coal available
“At least half of that initial production will go to Eskom and the rest to exports,” Wilkens told Miningmx.

One of South Africa's largest black-owned mining groups, ARM holds 51% of ARM Coal, which owns a 20% stake in the 12 Xstrata Coal South Africa collieries. ARM Coal holds 51% of the Goedgevonden project.

Talking about the mine’s total production, Wilkens said: “If Eskom wants more coal, we’ll make this mine bigger to give them more. We will deliver anything they want.”

Asked if there was any pressure from Eskom to divert coal tonnes away from exports, he said: "No. It depends on the quality. The higher qualities of coal are not always suitable to use locally."

Power utility Eskom said last week it wants to buy another 45Mt of coal over the next two years to replenish depleted stockpiles seems to have caught South African coal a little by surprise.

The new purchasing levels are about four times more than Eskom and the Chamber of Mines told the market through their working group about two weeks ago. To be fair, these estimates applied to this year alone.

“Eskom is looking for more tonnes and we have capacity to make more coal available to Eskom,” Wilkens said. “We could start doing some of that quite soon. We will be part of the solution.”

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Eskom declared force majeure on its power supplies on 25 January this year, effectively shutting the country’s mines down for five days. The mines are now supplied with 90% of the power they consumed before, prompting a stream of warnings about reduced production and possible shaft closures and job losses.

At the core of the problem it appears Eskom had lost skilled staff, reducing its workforce by half, battled with unplanned maintenance, drawn stockpiles down to nothing and had wet coal to contend with during a wet summer.

The power crisis has dented investor faith in the country. The most high profile casualty might be the Rio Tinto aluminium smelter that was to be built at the new Coega harbour and industrial development zone.

Rio CEO Tom Albanese has said the group would like to see a power station built to ensure there would not be power shortages before the company would commit to building the smelter.

Another major coal producer, BHP Billiton, is working towards the initial 5.4 million tonnes extra target laid out by the coal working group some weeks ago. This figure was raised to 11 million tonnes before the end of 2008 by Eskom executive Rob Lines two weeks ago.

“Our mines are producing flat out and we are doing everything we can to supply Eskom with coal,” said BHP spokeswoman Bronwyn Wilkinson. An Anglo spokesman said the company’s coal division was working towards the 5.4 million tonnes target.