Eskom was not going to back down on its claim of R2-billion in penalties from Glencore’s Optimum Colliery and had issued legal summons to recover it‚ Eskom’s acting chief executive Brian Molefe said.
Last week Glencore put Optimum Colliery‚ which supplies Hendrina Power Station‚ into business rescue because it said it cost almost twice as much to produce the coal as Eskom was paying for it.
Earlier this year Optimum stopped producing coal for export because international coal prices had plunged.
Molefe told a media presentation on Eskom’s year-end results that when Eskom first committed to a 30-year contract with Optimum‚ the coal quality was good. But now the mine was ageing‚ coal quality was deteriorating and that was contributing to the poor performance of Eskom’s generating fleet. It was also damaging Eskom equipment.
Eskom had notified the big mining companies with which it held decades-old cost-plus coal supply agreements, that it did not want to renew these contracts when they ended‚ he said.
In these agreements‚ Eskom owned coal mines near power stations where it was responsible for investing expansion capital but the mine was managed by a specialised coal company.
Eskom was finding cost-plus contracts inflexible and it did not want to own mines‚ Molefe said. It wanted to be able to buy coal from suppliers that offered the best price.
“Optimum was exporting good quality coal and not sharing the profits with Eskom‚” Molefe said. “The basis of the dispute is that the contract still has two years to run and they are under an obligation to supply us with coal to 2018 at a particular price. They are asking to be relieved of their obligation. We are not in a position to do so because the National Energy Regulator of SA has not granted our request for cost-reflective tariffs.
“They have accrued penalties of R2-billion on which we have issued summons. How can we ask Soweto residents to pay their debts if we allow Optimum to get away with R2-billion in penalties?
Glencore said Optimum was disputing the Eskom claim‚ which would have the effect of Optimum supplying coal to Eskom for an effective price of R1 a ton.
“The coal supplied by Optimum to Eskom is among the highest quality coal supplied to Eskom and is the quality of coal that the mine is capable of producing on a sustainable basis‚” it said. “Eskom has burnt the coal and it resulted in no meaningful issues for Eskom.”
It said the business rescue practitioners would determine the appropriate course of action for the mine.
Eskom also said in its integrated report that it had signed a memorandum with Anglo American Inyosi Coal to supply coal to the Kusile power station‚ which is currently under construction‚ as Anglo Inyosi had agreed to meet Eskom’s procurement requirements.
Eskom and Anglo discussed the Kusile supply contract for more than two years as Anglo Inyosi Coal is only 27% owned by black empowerment groups. Eskom acting group executive for capital Abram Masango said Eskom would not compromise on its insistence that its suppliers be at least 50%, plus one share black-owned. — BDLive