Eskom says Anglo coal is a rip-off

(File, iStock)
(File, iStock)

Johannesburg – Anglo American’s New Denmark Colliery is one of Eskom’s most expensive coal suppliers, according to a statement released by the power utility.

Eskom stated that the Tutuka Power Station’s coal supply from the New Denmark Colliery for the period between April 2016 and May 2016 came to R1 600 per tonne. This includes the total costs of operating a mine as well as the amortisation costs of historical capital expenditure, it stated.

Yesterday, following the announcement of Eskom’s Integrated Results for 2016, Anglo American released its own statement to clarify that the cost of coal supplied to the Tutuka Power Station was R668 per tonne for that period. This was in accordance with the contract, mine progress and agreed budget between Eskom and Anglo American.

Anglo American spokesperson Moeketsi Mofokeng told Fin24 that it stood by its statement. “Given the historical circumstances surrounding New Denmark Collier, which Eskom is fully aware of, we feel that the statement issued is still adequate,” he said.  

Eskom also stated that even if the price quoted by Anglo American is correct, it is still more than 70% above Eskom’s average price of coal. About 18% of Eskom’s energy costs are from independent power producers and IPPs only account for 4% of production, according to its integrated annual results.

Eskom’s investment in New Denmark Colliery was initially done on a cost-plus basis with an intention to provide security of supply, and pricing. Eskom called for Anglo American to change the performance of the mine to be in line with these intended expectations.

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