Anglo confident of ‘favourable outcome’ with Eskom on sale of three tied coal mines

Mining group Anglo American says it has held discussions with and continues to engage with Eskom, government and potential bidders on its plan to exit its Eskom-tied mines – Kriel, New Denmark and New Vaal.

Responding to Eskom interim CEO Matshela Koko’s insistence that Eskom had assets at the mines and that the mining group could not, therefore, proceed with its restructuring efforts without first consulting Eskom, Anglo spokesperson Moeketsi Mofokeng told Engineering News Online that consultations were indeed under way.

“The issue of the transfer of assets and the rights and obligations of all parties as stipulated in the coal supply agreements is part of ongoing discussions. Our objective is to ensure that these mines continue to be viable and sustainable over the long term and we are confident that we will reach a favourable outcome,” Mofokeng said.

Anglo would also be seeking a solution that was aligned to Eskom’s policy of having coal supplied from operations that are more than 51% owned by black shareholders. However, Mofokeng highlighted that not all nine of Anglo’s South African coal mines were tied to Eskom power stations, with most of the other mines having been established primarily to service the export market. One mine was also dedicated to supplying energy and chemicals group Sasol, which converts coal to liquid fuels and chemicals at its Secunda complex, in Mpumalanga.

Mofokeng also confirmed that Anglo had responded to an Eskom request to create a register of Eskom assets at the operations. However, he would not be drawn on the contents, or on the value of the assets on the register.

Koko said Eskom had received an asset register from Anglo confirming that Eskom owned assets, which he said were not reflected on Eskom’s balance sheet. “It is really stupid that there are assets that belong to Eskom that are unaccounted for on our books,” he argued, indicating that they were currently being costed for inclusion among the utlity’s assets.

He insisted that Eskom had no intention of being “difficult” when it came to Anglo’s proposed restructuring. “But we demand what belongs to us. Nothing about us, without us.”

Koko also expressed anxiety about suggestions in recent media reports that Anglo was preparing to dispose of the mines in which the utility had a direct interest. Bloomberg News reported in January that Anglo had shortlisted three bidders for its domestic coal mines, specifically naming well-known black business personalities Mike Teke, Phuthuma Nhleko and Sandile Zungu.

“It will never happen without us, they are our assets,” Koko insisted, in the presence of Public Enterprises Minister Lynne Brown, who expressed support for Eskom’s policy of using coal procurement to drive economic transformation.

“There’s a decision that was taken, before my time [as Minister], that there be a 51% [ownership of mines supplying Eskom] . . . I support that decision actually, because I really do think that Transnet and Eskom, in particular, are big economic drivers in our country, and so it must be the one place that we are able to transform and help to transform the economy so that we create greater inclusivity,” Brown said.

“In coal supply, we actually have an opportunity to do so. And that is the point we are making: economic transformation is an imperative of the country, the majority cannot be left out as it has been.”