The power utility’s renewed commitment to the cost-plus coal investment model has improved the prospects for the likes of Seriti Resources, which hopes to supply Eskom, and Anglo American.
Eskom’s drive to procure more coal has given the prospects of Glencore, Anglo American and South32 – some of the largest diversified mining firms listed on the JSE – a welcome boost mainly because it has stoked concerns of a supply deficit in the export coal market.
Eskom said earlier this month at its State of the System update that it had won National Treasury approval to embark on a major coal procurement drive as well as to recommit to the cost-plus financing model. All in all, it wants to lock in about 85% of its primary energy requirements, which is in excess of 100 million tonnes (Mt) of the fuel.
Former Eskom CEO, Brian Molefe, somewhat infamously ditched cost-plus funding – a system in which Eskom pays for the capital cost of mine development and resource replacement – claiming that the power utility wanted to own the bread (coal) not the bakery (the mine).
This story is from the 24 May 2018 edition of Finweek English.
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This story is from the 24 May 2018 edition of Finweek English.
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