Exxaro, Eskom’s biggest coal supplier, might have put a spanner in the works that could affect its coal supply deal with the power utility.  

Last month Exxaro’s 10-year lock-up period ended. The company announced the unwinding of its black economic empowerment (BEE) policy and said it was looking at replacing the structure with one that would see the company’s black ownership reduced to approximately 30%.

However this 30% ownership level is below the 50% threshold that Eskom requires from its coal suppliers. “Eskom’s coal procurement policy requires all the mines that supply coal to its power stations to have a black ownership target of more than 50% throughout the life of the mine,” Eskom said on Monday.

While Eskom has several suppliers, including Anglo American, South32 and Glencore, Exxaro supplies the power utility with more than one third of its coal supply.

Exxaro has in the past relied heavily on Eskom, with 92% of its coal sales were attributed to the power utility, however the company said it was looking at a way to reduce its dependency on Eskom to widen its local and international customer base.

Eskom to meet with Exxaro

Eskom’s interim chief executive Matshela Koko said the company would not compromise on the costs or quality of its coal supply and maintained its stance on purchasing coal from companies that complied with its black ownership requirement.

Koko said Eskom would soon request a meeting with Exxaro to discuss how it intended to comply with its 50%-plus policy requirement.

Mzila Mthenjane, Exxaro’s executive head of strategy said the company would meet with Eskom to discuss the change to its black empowerment structure.

Eskom spokesman Khulu Phasiwe said on Monday that the date of the proposed meeting had not yet been finalised.