Eskom vows to continue buying coal from black-owned miners

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Eskom headquarters Megawatt Park in Sandton. The DA handed over a petition on excutives' bonuses to CEO Brian Molefe on 21 January 2016.

JOHANNESBURG - Eskom on Monday said it would continue procuring coal from 50 percent-plus black-owned coal miners.

The national power utility said its coal procurement policy required that all their suppliers have a “black ownership target” of more than 50-percent throughout the life of the mine.

Eskom made the announcement in the wake of media reports that the black shareholding of one of Eskom’s suppliers, Exxaro Resources, could be reduced to about 30-percent following the expiry of an agreement with its BEE partners.

Analysis: The Future of Eskom and South Africa’s coal sector will be nothing like its past

Eskom said it would soon ask for a meeting with Exxaro in an effort to understand how they planned to comply with the 50 percent-plus policy requirements.

In a statement, Eskom’s interim group chief executive Matshela Koko said they would continue to create a conducive environment in a bid to stimulate the growth of emerging black coal miners into major coal suppliers.

Koko said the power utility’s policy of sourcing coal from majority black-owned suppliers was a thorn on the side of many of the company’s main coal suppliers.

He said these suppliers subscribed to a “once empowered always empowered” principle, and a black ownership target of 26 percent rather than a minimum of 50-percent black ownership.

“What is actually happening is that the ongoing legacy of the pre-1994 economy is being confronted by the Eskom leadership,” Koko said.

“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.”

However, Eskom said whilst pursuing transformation objectives within the coal supply industry, the security of coal supply to its power stations could not be compromised.

The power utility said coal qualities had to remain within specifications and the cost within the range prescribed by the National Energy Regulator of South Africa (Nersa).

Former Public Protector Thuli Madonsela’s “State of Capture” report found that Eskom may have violated the Public Finance Management Act (PFMA) by approving an advance payment of more than R659 million to Gupta-owned coal mine, Tegeta Resources, when it emerged that it needed funds to buy out Optimum Coal Holdings.