[miningmx.com] – ESKOM chairman Zola Tsotsi has criticised Anglo American for dragging its heels on its New Largo project which he said might not be ready in time to supply coal for its Kusile power station.
This is the proposed colliery that is supposed to supply Eskom’s 4,800MW Kusile power station with some five million tonnes of coal a year when the installation hits full pelt, around 2019. However, the colliery is still on the drawing board and there doesn’t seem to be any indication as to when it will get developed.
Said Tsotsi: : “We are having an almighty struggle with Anglo around the Kusile coal supply because there are certain things that we demand must happen and Anglo has got its own ideas.
“We’ve been back and forth for the last couple of years to the extent that that mine will not be ready when Kusile starts up’. He believes the conflict makes Eskom “acutely aware of the stranglehold mining houses have on us going forward’.
The delay is because the two sides can’t agree on whether Anglo American has met its empowerment quota. Anglo argues that it meets the requirements of the Mineral & Petroleum Resources Development Act (MPRDA) by dint of its partner Inyozi consortium which has a 27% stake in New Largo.
Eskom, however, sets down an empowerment target of 50% plus one share to any new supplier to its power stations. This requirement is in terms of the Department of Trade & Industry’s BBB-EE legislation which was formulated to govern standards for all empowerment codes in all industries. It’s an unfortunate fact of law, however, that the MPRDA is not a code and therefore cannot be trumped by the BBB-EE.
Well, no-one is entirely sure.
Head of Webber Wentzel Attorneys mining and energy unit, and partner, Peter Leon said a recent meeting between the CEO of a coal mining company with Eskom ended in aggressive terms. “They expected his company to be 50.1% black-owned in order to meet Eskom’s requirements which, of course, is nonsense,’ said Leon.
“It shows you how far this has gone and the thinking in state-owned enterprises. It points to a broader issue of the impact of amendments to BEE codes. The trumping provision is that the mining charter has to yield to what the DTI prescribes.’
The disharmony between the two empowerment laws is problematic for coal miners supplying to Eskom, especially as there’s no clarity on which of the two pieces of legislation has priority – a fact recognised by former mines minister, Susan Shabangu in February. “We have to find a way of harmonising them,’ she told a mining conference.
Anglo American’s response is that it is investing every effort’ to soften delays in construction of its New Largo. “We are committed to exploring opportunities that promote broader participation in the domestic coal mining industry,’ it said.
“We continue to remain committed to the development of the New Largo Project and earlier this year have begun having regular discussions between Anglo American Inyosi Coal and Eskom.
“We have completed all the requisite studies resulting in the mining right being granted by the DMR [Department of Mineral Resources] and we have also lodged an application for a water use licence in a bid to ensure that delays are minimised once all the contractual issues are resolved.
“Whilst we are engaging with Eskom, Anglo American is investing every effort exploring opportunities to mitigate the impact of potential delays,’ it said.
In the recent past, Anglo American CEO, Mark Cutifani, has expressed optimism a deal will be settled with Eskom, but Tsotsi doesn’t seem convinced.
“There’s been no traction on this matter for a long time and we just think that there are people below Mark who want to pull in the opposite direction. We’re trying to get things to move forward but it’s taking too long,’ he said.
