CEO Mxolisi Mgojo
Photo by: Creamer Media
JOHANNESBURG (miningweekly.com) – State electricity utility Eskom has informed coal producer Exxaro that it will not be taking the full contractually agreed tons of coal from the JSE-listed company from April 16 until one month after national lockdown has been completely lifted – a stance that Exxaro said it will vigorously contest.
Mining Weekly can report that Exxaro advised shareholders in a stock exchange news service announcement on Monday that Eskom Holdings State Owned Company Limited had served Exxaro Coal with letters calling force majeure on the coal supply agreements in place for the supply of coal to the Medupi and Matimba power stations.
The effect of the letters, Exxaro stated, was that Eskom would not be taking the full contractually agreed tons of coal until after the lockdown was over.
After consultation with its legal advisers, Exxaro stated that it was of the view that this event did not constitute a force majeure as stipulated in the coal supply agreements, as the power stations were still capable of supplying power.
“Exxaro will vigorously defend its position in this matter and take the necessary action,” the JSE-listed company, headed by CEO Mxolisi Mgojo, stated.
Exxaro said it was also of the view that this communication from Eskom was not in accordance with the spirit of the call by President Cyril Ramaphosa, requesting businesses to continue paying contractors.
Exxaro said it would engage with Eskom to discuss the matter and to seek a mutually acceptable resolution.
As Eskom had not indicated the extent of the reduced coal offtake, the potential impact on Exxaro could not be quantified until discussions with Eskom had been finalised.