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Eskom must pay for Arnot shutdown - Exxaro

Dec 02 2015 06:13
Dane McDonald
Coal

(File, iStock)

Company Data

EXXARO RESOURCES LIMITED [JSE:EXX]

Last traded 137
Change -2
% Change -2
Cumulative volume 817389
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Cape Town – Exxaro [JSE:EXX] announced on Tuesday that it would initiate “appropriate activities” following Eskom’s decision to allow the termination of a Coal Supply Agreement (CSA) at its Mpumalanga coal mine.

Exxaro spokesperson Mzila Mthenjane told Fin24 that he could not divulge what the “activities” entailed as the company still needed to “engage with employees as well as unions”.

On September 8 2015 Eskom advised Exxaro that the 40-year CSA would terminate on December 31 2015 and instructed Exxaro to start the process of closure of the Arnot Coal Mine.

READ: Eskom ‘bombshell’ puts 1000 jobs on the line

The Arnot mine was a “cost plus” mine, meaning that Exxaro was the mining right holder and Eskom owned the mine’s movable and immovable assets.

“Eskom will be responsible for closure costs,” Mthenjane said.

The utility buys coal from Arnot for R900 a metric ton, while local prices for the fuel have declined since the start of 2014 to around R680 a ton, Bloomberg reported.

Earlier on Tuesday the utility said that it was unaffordable for “Eskom and the country” to continue buying coal at that price.

READ: Eskom on Arnot job losses: SA can't afford output costs

Eskom meanwhile expressed concern over reports stemming from what it termed the leaking of confidential information.

"Eskom is deeply concerned about the recent media reports regarding the potential closure of the Arnot coal mine and the resultant job losses that might follow if Eskom does not extend Exxaro’s contract to supply coal to the Arnot power station.

"Eskom also views the leaking of confidential information as irresponsible and reserves its rights to take appropriate action," the utility said in a statement.

The closure would result in the potential loss of 1 139 permanent jobs in addition to the jobs of 546 contractors.

On Wednesday, the National Union of Mineworkers will march to the mine in Middelburg with a list of demands. One of these is that Eskom must renew the contract with the same conditions.

ALSO READ: NUM facing brick wall on Eskom's Arnot decision

eskom  |  exxaro  |  coal  |  state owned enterprises  |  mining
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