Eskom warning over BEE deal

ESKOM has threatened to stop buying coal from Exxaro if it is not more than half black-owned.

“Eskom notes media reports that Exxaro’s black shareholding could be reduced to about 30% following the expiry of an agreement with its BEE partners,” the utility said yesterday.

“Eskom will soon ask for a meeting with Exxaro in an effort to understand how they plan to comply with the 50%-plus policy requirements.”

On November 22, Exxaro issued a SENS announcement saying MS333, an empowerment vehicle created 10 years ago, intended to cash in its 50.19% shareholding.

At yesterday’s market capitalisation of about R30.8-billion, MSS333’s stake would be worth R15.4-billion.

Exxaro said the Industrial Development Corporation (IDC), which owns 15% of MS333, had agreed to invest in a replacement empowerment vehicle provisionally called “NewBEEco”.

The IDC has also agreed to provide a debt guarantee for up to R700-million to help new black shareholders buy some of MS333’s shares.

As part of the deal, Exxaro said it intended to repurchase and cancel about R3.5-billion of its shares from MS333.

Eskom interim chief executive Matshela Koko said yesterday: “Eskom’s policy of sourcing coal from majority black-owned suppliers is a thorn in the side of many [major] coal suppliers.

“These suppliers subscribe to a ‘once empowered always empowered’ principle, and a black ownership target of 26% rather than a minimum of 50% black ownership.

“The ongoing legacy of the pre-1994 economy is being confronted by the Eskom leadership.”