Anglo could pull plug on Eskom coal supply

Compton_effect

Compton_effect

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http://www.fin24.com/Companies/Mining/Anglo-could-pull-plug-on-Eskom-coal-supply-20150216

The gist of it. Eskom built the station near a big coal deposit Anglo owns. Anglo built a mine there to supply the station. Eskom won't buy from Anglo unless they have a 60% BEE rating. Government regulations state they only need 55%. So Anglo is taking its ball and going home. Nothing Eskom can do about it. Lets see who blinks first.

Johannesburg - Anglo American wants to withdraw its supply of coal to Eskom because of government requirements that blacks must own at least 55% of a supplier, Netwerk24 reported on Monday.

It relates to the stubborn refusal by government that New Largo, which is supposed to be the anchor supplier of coal to the Kusile power station, enters into a long term agreement with the owner, Anglo Inyosi Coal, before 60% of the mine belongs to black owners.

This could have enormous consequences for the supply of coal to Eskom, because large investments would have to be done in new coal mines over the next five years in order to meet Eskom's future coal needs.

In December 2014, after years of uncertainty, Eskom agreed with Anglo Inyosi Coal on a framework to prevent delays in building the mine from causing the power station to take even longer to go into operation.

The framework simply means that Kusile will obtain coal from New Largo. A final supply agreement will only be signed when Anglo Inyosi Coal is in control of black shareholders.

Shortly afterwards it was revealed that the first unit of Kusile could only supply power in 2017.

Mark Cutifani, CEO of Anglo, was diplolmatic when he announced on Friday that Anglo is withdrawing its supply of coal to Eskom.

It is good business, he said, but does not make a big contribution to their headline earnings. Anglo owns 63% of Anglo Inyosi and black shareholders own 27%.

"We are going to reduce our shareholding in the mines to less than 50%, including in New Largo," said Cutifani.

Anglo will, however, not supply any financing or other support to increase the BEE shareholding.

"It will have to happen purely on a commercial basis."
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Arguing over whether it's BEE or not.

This is like two guys in a sinking boat surrounded by sharks, arguing over who has the biggest penis. ****ing hilarious watching this lot.
 
You want it...YOU BUY IT! Nice one Mark. Someone need to stand up to these idiots.
 
WaxLyrical said:
Just give the population ****ing electricity. **** BEE.
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In 2011 when all the nationalisation strikes gained momentum, Anglo Kumba assured all staff that they would have positions at their other minesin Africa. I was at the one mine when management had that chat with staff.

They've slowly pulled out of SA. They have nothing to lose anymore.
 
Magnum said:
You want it...YOU BUY IT! Nice one Mark. Someone need to stand up to these idiots.
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+1

these BEE deals only ever benefit the few ANC cadres anyway ... so there is no reason for them.
The mining giants have turned sour to SA, especially with the other african countries wooing them with sweet deals. No point in wasting time in a country that is going to force you into partnerships and crazy agreements
 
Eskom could win. Depends on how long the mining rights are that was awarded to Anglo for that coal mine.
 
Compton_effect said:
They can't risk calling their bluff. Anglo can pull out with minimal loss.
Its like one innocuous statement from a article about the new Land Bill. A 100 farmers supply 70% of our food. They don't realize it - but they call the shots.
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Logic does not apply anymore government will gladly have them leave and benefit from the carnage that follows as they pillage whats left.
 
Anglo stick to it. You get better prices by exporting in any case. And while the AnC is driving down the rand you might as well capitalize.
 
It's not as simple as that. The state owns the minerals, so they can pretty much tell Anglo to take a hike and go back to London, which they won't because their biggest mine is Kumba. So Anglo will comply and ANC bigwigs will get BEE shares. It happens all over the world.
 
rza said:
It's not as simple as that. The state owns the minerals, so they can pretty much tell Anglo to take a hike and go back to London, which they won't because their biggest mine is Kumba. So Anglo will comply and ANC bigwigs will get BEE shares. It happens all over the world.
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Not exactly true. The Mining rights given to them is with security. If the Government pulls the plug be sure that Anglo will get their investment with interest back as part of the agreement. No mine will invest billions into setting up a mine without their own interests being protected. It all comes down to the duration of this allocation of rights.
 
And the irony is that Anglo contributed probably more than any other single company to the industrialization of this country, provided huge financial support historically for the ANC (and it's struggle stalwarts personally as well as their children), and probably has one of the the biggest corporate social responsibility programs.

This is the time to be worrying about BEE percentages? I actually hope that Anglo pulls out and leaves this miserable bunch of ingrates to pick up the pieces.
 
rza said:
It's not as simple as that. The state owns the minerals, so they can pretty much tell Anglo to take a hike and go back to London, which they won't because their biggest mine is Kumba. So Anglo will comply and ANC bigwigs will get BEE shares. It happens all over the world.
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No they can't.

rza, please, don't spout forth nonsense on topics you know nothing about.
 
Last time I checked, there was an oversupply of coal in SA. It's gone as far as that even the chinese have dropped consumption in favor of gas and oil.
 
MagicDude4Eva said:
Last time I checked, there was an oversupply of coal in SA. It's gone as far as that even the chinese have dropped consumption in favor of gas and oil.
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http://www.bdlive.co.za/business/energy/2013/01/31/eskom-coal-supply-crisis-on-the-horizon

No oversupply for Eskom as most of the production is committed on long-term contracts to buyers so Eskom is actually facing a shortage.

ESKOM’s coal supply could be depleted by 2016 unless new mining projects come on stream, an IHS McCloskey coal conference in Cape Town heard on Wednesday.

South Africa is one of the world’s largest suppliers of thermal coal, but most of the product is exported to Europe and fast-growing markets in Asia, mainly China and India.

Most of the coal reserves are in the Waterberg region in Limpopo, but in light of extensive infrastructure backlogs there, companies are reluctant to begin new mining projects because of the high costs involved.

Ian Hall, chairman of the steering committee of the South African Coal Road Map, told the conference that about 60-million tons of new coal capacity had to come on stream from 2015 to secure Eskom’ s supply.

"Eskom is facing a serious shortage … this creates both an opportunity and challenge for the coal mining industry," he said.
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