SERITI Resources CEO Mike Teke says he is not worried about the company’s close ties with debt-laden Eskom.
In fact, Seriti’s track record with South Africa’s embattled power utility is one of the reasons South32 chose his black-empowered company over dozens of other suitors to buy its 25 million tons per year (mt/y) of thermal coal mines, the former Optimum Coal CEO and president of industry group Minerals Council South Africa told IHS Markit.
“I am not concerned that Eskom will fall over,” he said. “Eskom has never failed in our relationship.”
A “coal bull”, Teke expects global coal prices to rebound significantly over the next few years, setting the stage for his grand ambitions to turn his two-year old company into a “continental gamechanger”.
Teke said he aims to make Seriti a household name all over Africa, with the company playing a key role in the development of clean coal technology to power not only South Africa, but the rest of the continent.
“We need to think of how to develop the continent,” he said. “The model to modernise is to have the energy for development to spread. I believe coal will be in that story,” Teke said.
When it secures South32’s coal interests housed in South African Energy Coal (SAEC), Seriti will be South Africa’s second largest coal producer.
Seriti snapped up a number of coal mines from Anglo American recently, and is also eyeing Optimum Coal.
The mines purchased from Anglo American are New Denmark, Kriel and New Vaal, and supply about 24 mt/y to Eskom, which generates a quarter of South Africa’s power from the coal. The company also owns New Largo, a greenfield asset from Anglo that is expected to also supply Eskom.
With SAEC in its stable and if New Largo is completed, Seriti could control 50 mt/y or 40% of Eskom’s annual burn with SAEC.
On becoming an export play, Teke told IHS Markit that he has not yet decided whether Seriti will handle SAEC’s exports in-house or partner with an international trader. SAEC currently has its own coal trading unit.
He, however, said Seriti has the capabilities and he understands how the export markets work.
SAEC exported 9.88 mt in FY2019 and has a 19 mt/y export entitlement at the Richards Bay Coal Terminal.
