[miningmx.com] – OPTIMUM Colliery has offered to continue supplying coal to Eskom’s Hendrina power station at a heavily subsidised rate until the end of November while negotiations continue on the future of the mine.
According to a spokesperson for the Optimum business rescue practitioners (BRPs) Eskom has yet to respond to the offer.
Optimum is currently supplying coal to Hendrina at a price of around R150/t in terms of a 60 day interim agreement which is due to end on November 4.
The cost of producing coal from Optimum is some R400/t and the difference is being funded by colliery owner Glencore while negotiations between the BRPs and Eskom continue.
The spokesperson said funding for the offer for the continuation of supply until end-November was “based on a guarantee from Glencore”. She declined to comment on the state of play in the negotiations between the BRPs and Eskom.
Optimum went into business rescue proceedings on August 4 and the BRPs suspended coal deliveries to Hendrina on August 20 in response to Eskom’s action in imposing R2bn in penalties on the colliery for supplying coal that was below quality specifications.
The net effect of Eskom’s action would have been that Optimum would have received R1 per tonne of coal delivered whereas it previously received R150/t which Glencore said was way below the actual production cost of R400/t from the colliery.
On September 7, it was announced that the BRPs had reached an interim agreement to keep supplying coal to Hendrina until November 4 while they continued to negotiate with Eskom over the future of the colliery.
The spokesperson added: “… the purpose of the new offer is to allow for continued supply to Eskom while the BRPs continue to consider alternatives for rescuing the company.”
Optimum supplies some 5.5 million tonnes (mt) of coal annually to Hendrina. The mine also used to produce some 5mt of coal annually for the export market but its export mining operations were shut down earlier this year because of the drop in export coal prices.