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Eskom paying 50% more for coal
25/02/2008 21:00 - (SA)
Johannesburg - State utility Eskom is paying up to 50 pct more in rand per tonne for additional coal to be delivered in the next two years which is needed to avoid further power cuts, South African coal and power industry sources said on Monday.
Eskom has contracted over 34 million tonnes of domestic grade coal and run-of-mine coal originally intended for exports from large and small mining companies.
Some of this will be used to rebuild critically-low stocks at power plants and some for increased coal burn.
"We've been paying significantly more than on previous contracts," Eskom spokesperson Andrew Etzinger said on Monday.
Eskom has signed contracts for at least R100 a tonne free-on-rail or free-on-truck with mining companies, and some contracts have been substantially higher than that figure, industry sources said.
Eskom has bought run-of-mine coal at prices more than double those of domestic grade coal, they said.
In 2007, Eskom was buying at around R70 a tonne FOR.
Still negotiating
Eskom is still negotiating emergency coal supply contracts at varying price levels with suppliers, industry sources said.
"Prices are still under discussion and negotiation with Eskom," Anglo Coal'sJ> spokesperson Pranill Ramchander said.
Black Economic Empowerment coal producer Exxaro, one of Eskom's largest coal suppliers, has not been selling spot coal to Eskom, a spokesperson said.
"We supply coal mainly on a contracted basis, long-term, contracts, so we have very fixed prices as far as that is concerned. We do not sell coal to Eskom on a spot basis as with a number of smaller producers in the market. So those sort of price increases that you've quoted would not apply to us in the large part," said Trevor Arran, head of investor relations at Exxaro.
Exxaro recently committed to supply Eskom with 13.5 million tonnes of the 45 million sought by the utility over two years.
Arran said Exxaro would focus on supply of Eskom domestic coal grade rather than diverting run-of-mine export intended coal to the utility.
A spokesperson for Xstrata would not comment on pricing or how much coal the company plans to supply to Eskom. Almost all Xstrata's coal production is exported, Songezo Zibi, spokesperson for Xstrata said.
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