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Eskom reiterates 50%-plus black ownership requirement for coal suppliers

Eskom reiterates 50%-plus black ownership requirement for coal suppliers

Photo by Duane Daws

5th December 2016

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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State-owned electricity provider Eskom on Monday reiterated its commitment to procure coal for its power stations from companies that have a black ownership of more than 50%, throughout the life of the mine.

This comes after Exxaro Resources recently revealed a new black economic empowerment (BEE) scheme that will see its black shareholding decrease to 30%, from 50.1% prior to November 28.

After announcing the new BEE scheme, which will replace the former BEE scheme that lapsed on November 28, Exxaro assured its shareholders that its existing coal supply agreements with Eskom would not be affected.

Eskom on Monday said it would soon ask for a meeting with Exxaro in an effort to understand how it plans to comply with the 50%-plus black ownership policy requirement.

It also committed to continue to create a conducive environment that would stimulate the growth of emerging black coal miners into major 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.

This strategy has been largely successful, with BEMs having increased coal sales from R1.7-billion (6%) in 2012 to R6.9-billion (18%) in 2015. This is projected to rise to R14-billion in 2020.

Eskom’s interim group CEO Matshela Koko said Eskom’s policy of sourcing coal from majority black-owned suppliers is a thorn in the side of many of the company’s main coal suppliers.

These suppliers subscribe to the “once empowered, always empowered” principle, and a black ownership target of 26% rather than Eskom's minimum stipulated 50% black ownership.

“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.”

While pursuing these transformation objectives within the coal supply industry, the security of coal supply to Eskom’s power stations cannot be compromised. The coal qualities must remain within specifications and the cost must be within the range prescribed by the National Energy Regulator of South Africa.

South Africa generally has lower coal costs owing to its high local availability. This has enabled lower overall generation costs and contributed to South Africa having one of the cheapest electricity price tariffs globally.

A 2014 survey conducted by the US-based NUS Consulting showed that South Africa’s electricity prices, at $0.09c/kWh, were the fourth-lowest among the 18 countries monitored.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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