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Eskom owns assets at some coal mines - Koko

Johannesburg - Eskom owns assets at mines that it part-funded and will now try to add them to its balance sheet, said Matshela Koko, executive head of generation at Eskom.

Talks with coal miners including Anglo American and Exxaro Resources to transfer the assets will be “a painful process,” Koko said after the utility’s full-year earnings presentation on Tuesday at Megawatt Park in Johannesburg.

He declined to comment on details or an overall value of the assets.

Eskom is the country’s biggest coal buyer and uses the fuel to generate 83% of the power it produces for the continent’s most-industrialised economy.

The utility helped develop many of the country’s mines using a so-called cost-plus model, in which it paid for the cost of building mines plus an agreed profit margin to the operators. The utility is looking to reduce what it pays for coal and is re-evaluating supply partners and agreements.

Anglo American is aware that Eskom is reviewing the cost-plus assets, but the utility hasn’t yet shared their position, Anglo spokesperson Moeketsi Mofokeng said by phone.

Exxaro is in talks with the utility for funds to develop the Matla coal mine, the Pretoria-based company said last month. Eskom in December didn’t renew a contract with Exxaro’s Arnot mine, which supplied a power plant by the same name for 40 years.

“In relation to Arnot, we indicated that it’s a cost-plus asset that belongs to Eskom, given that they provided the capex to develop the mine,” Mzila Mthenjane, Exxaro’s head of stakeholder engagement, said in a text message. “It’s a step in the right direction and we anticipate engaging in this regard on all cost-plus assets.”

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