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We'll get slightly higher prices for coal to Eskom - Sipho Nkosi, CEO, Exxaro
In an interview on Radio 2000 @ 18:00 on Thursday, February 21, 2008
[miningmx.com] -- SOME 13 million tonnes of coal that will be supplied from Exxaro Resources to Eskom will be sold at "slightly higher prices" that the current contract price, said Sipho Nkosi, CEO of Exxaro.
The supply of coal is over and above the normal volumes of coal the company sells to Eskom. This follows a call by Eskom that it must receive 45 million tonnes of additional coal over the next two years.
Eskom, the South African power utility, indicated earlier this year it had only five days of coal inventories at certain power stations and therefore required more volumes ahead of the South African winter.
Its coal shortage problems are a result of massive demand on its power generating capacity which has been struggling to keep pace with the country's economic growth.
"I must say that the prices that we think we're going to get, because we are still in
negotiations with them, are going to be slightly better than what we are currently getting," said Nkosi on the supply of coal to Eskom.
"Eskom have had lower stock levels at their own power stations, and I think that what they are trying to do is to build up the stock levels to probably 20 days from the lows of the southern part of 10," he said.
Meanwhile, the export price of coal had shot up to $100/tonne or more from about $19/tonne about five or six years ago. "That's really, really, is significant," said Nkosi who became CEO of Exxaro in September.
"But of course, with that might I add that we shouldn't forget that the cost element, the input costs that come with it, when you're talking things like your diesel, your tyres and all that - really, it's gone up."
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