EXXARO Resources said on Thursday it had signed an agreement with Eskom, South Africa’s power utility, to supply 9.3 million tons of coal a year to Matla power station, near Kriel in Mpumalanga province.
Supply will be from Exxaro’s Matla Colliery which has also secured new mining and water use licences with the South African government.
The colliery recently completed a R5.2bn expansion which was financed by Eskom. In terms of this long-standing tied-coal model, the utility secures exclusive coal supply in return. The coal supply agreement run from today until 2043, and replaces a CSA dating from 1983 which expired in June, 2023.
“This agreement ensures predictability and stability in the supply of coal to the Matla Power Station, an essential component of our generation fleet, and reinforces a partnership that has supported the nation’s power system for more than four decades,” said Eskom CEO Dan Marokane in a statement.
The CSA comes as questions are posed regarding the long-term viability of Eskom’s fleet amid a decline in end users. Mozal, an aluminium smelter controlled by South32, was shut in March after the parties failed to negotiate a new power deal. Mozal consumed over 900MW of power from Eskom.
Eskom is also in talks to supply a new power deal to ferroalloy producers Merafe Glencore Chrome Venture and Samancor which have mothballed South Africa’s ferrochrome smelters as electricity prices increased 900% over the last decade.
Discussions regarding a new tariff have been extended to April 9 in terms of which Merafe Glencore Joint Venture has extended the deadline for permanently closure of its remaining operations.
