ESKOM has delivered a list of questions to Anglo American intended to help it establish whether it has ownership rights to the thermal coal mines the UK group operates.
“We recently chatted to Anglo and sent them a list of questions. We are waiting for a response from them before adopting a stance,” said Brian Molefe, CEO of Eskom.
“It’s a bit premature to say anything on the outcomes we would like to see, but we want more black economic empowerment (BEE),” he added. The questions are intended to establish “… what assets might be ours,” said Molefe.
Group executive for generation at Eskom, Matshela Koko, has said in the past that his company should have ownership claims over mines that it helped build.
These are the cost plus mines that Eskom funded in return for an exclusive coal supply contracts (CSAs). The coal from the CSAs had to meet specified qualities and has to be sold at a fixed percentage above the operating cost of the mines.
Bloomberg News reported on July 5 that Eskom had completed a study of mines that supplies it with coal that it could move on to its balance sheet. Lawyers for Eskom concluded that the utility had “substantial” assets, said the newswire citing Koko.
Said Molefe: “If we own the mines, then when the assets are sold surely we can get a cut? We would use the proceeds to recoup our investment”. Another option would be to discount the cost of the coal in the relevant CSA related to the asset being sold. “But I’m jumping the gun,” he added.
Mark Cutifani, CEO of Anglo American, told Miningmx last month that Eskom had “a voice at the table” in respect of the mines. Anglo said in 2015 that it was to sell its domestic thermal coal mines which supplied Eskom some 21.5 million tonnes a year during the UK-listed group’s 2015 financial year.
Exports from the mines make up the balance of total production of 50.3 million tonnes annually. The mines include the Kriel, New Denmark and New Vaal mines which comprise the bulk of domestic supply. The only other Eskom-only mine operated by Anglo is the Mafube and Zibulo operations.
“People know that in domestic coal, the preference is for local ownership to be more than 50%,” said Cutifani. “Now in the end that’s not at all a legislated requirement, but given that Eskom sits on the other side of the contracts, in the end, they are paying the money.
“So they do get to make a good part of the rules. In that case, it’s not probably something in the long term that will be material to us because the ownership component is so small,” Cutifani said.
