Johannesburg - Mining company Exxaro’s plan to cut its black ownership to about 30% has sparked questions from state-owned electricity producer Eskom.
Eskom, in a statement on Monday, noted Exxaro's planned move and said that its coal procurement policy is that all mines that supply coal to its power stations must have a black ownership target of more than 50%.
“Eskom will soon ask for a meeting with Exxaro in an effort to understand how they plan to comply with the 50%-plus policy requirements,” said the power utility.
Late last month, Exxaro announced that its black ownership shareholding would drop from 50.1% to 30%.
Exxaro plans for a new company, NewBEECo, to be its empowerment vehicle, replacing Main Street 333.
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In an interview with Mining Weekly Online, Exxaro CEO Mxolisi Mgojo said because it has several long-term contracts with Eskom, some of which are over 30-year periods, there is little risk that the new BEE transaction will impact its deals.
The company further said that it is diversifying its short-term contracts to be less dependent on Eskom.
In its response to Exxaro’s move, Eskom has defended its BEE agreement regarding coal suppliers.
“As part of economic transformation, Eskom partnered with the Departments of Mineral Resources and Public Enterprises in December 2012 in the development of the Black Emerging Miner (BEM) Strategy,” said the company.
“This strategy has been largely successful, with coal from BEMs increasing from R1.7bn (6%) in 2012 to R6.9bn (18%) in 2015 and is projected to rise to R14bn in 2020,” the company added.
Eskom’s interim group chief executive officer, Matshela Koko, further said that Eskom’s policy of sourcing coal from majority black-owned suppliers is a “thorn on the side” of many coal suppliers.
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Eskom slammed these suppliers for allegedly subscribing to a “once empowered, always empowered” principle, and a black ownership target of 26% rather than a minimum of 50% black ownership.
“What is actually happening is that the ongoing legacy of the pre-1994 economy is being confronted by the Eskom leadership. This is the legacy that we have not worked hard enough to dismantle, and at times have been frightened to confront. Eskom has resolved to do something radically different,” said Koko in a statement.
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Eskom, though, said that while pursuing these transformation objectives within the coal supply industry, the security of coal supply to Eskom power stations cannot be compromised.
Meanwhile, Exxaro’s planned cut in its black ownership comes after Eskom did not renew a contract with Exxaro’s Arnot mine at the end of December last year.
The end of the 40-year coal supply contract further resulted in Exxaro shutting down its operation at the mine, affecting 1 800 jobs. Eskom ended the deal amid dissatisfaction with the alleged high prices of coal at the mine.