Commodity outlook: coal mines to keep lights on

Lack of timeous investment in a number of key cost-plus coal producers in the Mpumalanga province in South Africa is one of Eskom’s main challenges in securing coal supply for its power stations. The situation is exacerbated by steadily falling quality of the country’s coal output.

At a media briefing in Johannesburg in November 2018, Eskom CEO Phakamani Hadebe acknowledged that Eskom’s lack of investment in the ‘cost-plus’ coal mines had led to a decrease in supply from these sources of about six million tonnes.

“We realise that we need to engage with coal mining companies differently,” said Hadebe, and explained that Eskom was rebuilding relationships with certain mining companies and looking for new ways of negotiating affordable coal supply.

He noted that “to some mining companies we need to apologise because some of the decisions we have made spoiled the relationship” – and that some of those companies were “coming back and even reviewing their own prices, because at the end of the day we are all South Africans and what is good for Eskom is good for South Africa.”

Acknowledged: Mining Review Africa and www.miningreview.com