Cape Town – Acting Eskom CEO Matshela Koko has accused coal miner Exxaro of having “no decency” after it announced steps to transform itself from a black-owned company to a black-empowered one.
This occurred after Exxaro's [JSE:EXX] shareholders on Friday approved a transaction that will result in its black ownership declining from 50% to 30%, Exxaro announced on Tuesday.
Its share price was up 2.13% at 11:00 on Tuesday at R91.41 with an overall market value of R32.74bn.
When Exxaro was formed 10 years ago, Main Street 333 was created and introduced as the controlling (50.19%) black economic empowerment shareholder of Exxaro.
Main Street 333 shareholders were only able to dispose of their shares on November 28 2016 after agreeing on November 22 to unwind the BEE structure, with Exxaro repurchasing shares worth R3.524bn, the company explained on its website.
A new special purpose vehicle (NewBEECo) will be incorporated for the purpose of being the new empowerment vehicle for Exxaro, it said.
“It is the intention that NewBEECo will ultimately own 30% of the Exxaro shares. All of the existing direct and indirect shareholders of MS333 … will be invited to participate in the replacement BEE transaction by reinvesting all or some of the Exxaro shares received as part of the MS333 unwind.
“MS333 will not be retained as the empowerment vehicle for the replacement BEE transaction. The MS333 unwind will therefore apply to all the Exxaro shares owned by MS333 after the specific repurchase.”
Koko criticised the move on Twitter on Tuesday, tweeting: “So Exxaro decides to show Eskom a finger instead of radically transforming and has no decency to even engage on this matter.”
“Radical economic transformation is dealt a heavy blow by Exxaro,” he further tweeted. “Indeed black management control is necessarily progressive.”
Eskom said in a statement on December 5 2016 that it will continue to insist on procuring coal from 50%-plus black-owned coal miners.
“Eskom’s coal procurement policy requires all the mines that supply coal to its power stations to have a black ownership target of more than 50% throughout the life of the mine,” it said.
“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."
Koko said in the statement that Eskom’s policy of sourcing coal from majority black-owned suppliers is a thorn on the side of many of the company’s main coal suppliers.
These suppliers subscribe 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,” he 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.”
Exxaro is moving away from depending on Eskom as its core client, it announced in its integrated report in 2016.
"Securing additional export allocation at Richards Bay Coal Terminal and further entrenching ourselves as a premier coal producer in South Africa has been a strategic imperative for a number of years and a diversification priority to counteract our dependency on Eskom," it stated.
However it also said that Eskom "remains a key customer, with complex business and governance processes".
"Exxaro is the largest supplier to Eskom and it is essential to maintain this relationship, given the power utility’s volume of offtake of our coal production and therefore contribution to total revenue."Read Fin24's top stories trending on Twitter: Fin24’s top stories