Anglo may invest in Eskom plant

Cape Town - Anglo American would consider an investment in one of Eskom's two new coal-fired power stations, but only in order to secure its own electricity supply, says Cynthia Carroll, the mining giant's chief executive.

Her remarks during an interview with Sake24.com opens the door for Anglo to partner Eskom in Kusile, the R140bn coal-fired power station Eskom wants to build near Delmas. The station is in the balance because of funding problems.

Documents that Sake24.com has had sight of also show that Anglo is being considered as a partner for Kusile.

In its most recent proposals to the National Energy Regulator of South Africa (Nersa), Eskom raised the possibility of getting a private investor for 39% to 49% of Kusile.

The proposal is to a large extent a precondition for reducing Eskom's tariff hikes - which are now under consideration by the energy regulator - from 45% to 35%.

Anglo is a mining company, says Carroll, and in a wholly different world from that of electricity provision. After having been in the electricity industry she is fully aware of how big the difference is.

Anglo, she says, needs a reliable source of energy and can't put its operations and investments at risk by going without power. That is its point of departure.

But to own and operate a power generator is not Anglo's job. It would prefer to invest in its core activity, mining.

On the other hand, would it consider investing in a power station if necessary? Yes, she says, it would - but not on a grand scale, or as a power station operator. Only as an investor protecting its own energy supply.

Several experts who last month testified before Nersa on Eskom's proposals to get a private investor for Kusile said that this was not very likely to happen because investors would not have control of the power station.

Some believed that Eskom would do better to sell one or more of its existing and established power stations and use the capital to finance the construction of Kusile.

Anglo has also seconded more senior officials - in addition to Ras Myburgh - to Eskom to help manage the organisation. They include Ian Langridge, chairperson of the Energy Intensive User Group, who comes from Anglo Platinum, and Krish Pillay, an electrical engineer.

Carroll says that before Anglo is able to make certain investment decisions, particularly in the platinum industry, it has to know that the required electricity is available.

Myburgh, one of the country's top experts in the coal industry, was seconded to Eskom shortly after the electricity crisis in January 2008. At that stage he was chief executive of Kumba Iron Ore.

- Sake24.com

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