Eskom angry over coal company’s BEE change

A LEADING mining company’s plan to reduce its black economic empowerment (BEE) ownership has been slammed by Eskom acting chief executive Matshela Koko.

He was reacting to Exxaro Resources saying it would reduce its 50%-plus BEE to 30%.

At the heart of the stand-off is an Eskom policy of buying coal only from firms with prescribed BEE credentials.

Koko responded heatedly on Twitter on Tuesday to Exxaro’s news, saying the company had decided “to show Eskom a finger instead of radically transforming and has no decency to even engage on this matter”.

He also tweeted that “radical economic transformation is dealt a heavy blow by Exxaro”.

For the past two years, Eskom has implemented a policy of signing new long-term contracts only with coal suppliers that are more than 50% black owned.

But analysts have warned the parastatal may run out of coal in future because of this policy as huge investments would require new entrants.

Eskom consumes about 120 million tons of coal a year, worth about R45-billion last year, that is now largely supplied by a handful of companies. They are Exxaro and multinationals like Anglo American, South32 and Glencore, none of which now meet Eskom’s 50%-plus BEE ownership requirement.

“Meeting Eskom’s projected 60-million-tons-a-year new coal requirement will require investment of between R60- billion and R90-billion for the construction of at least five to 10 new mines,” the SA Coal Roadmap estimated in 2013.

Eskom has two new power stations under construction – Medupi, supplied by Exxaro’s Grootegeluk mine, and Kusile, designed to be supplied by Anglo American Coal’s New Largo mine.

But construction of New Largo has not begun because it does not meet Eskom’s ownership rules.

Empowerment consultants backed Koko’s position.

KIO Advisory Services founder Duma Gqubule said Exxaro could have come up with a better structure.

He described the Exxaro plan as a significant reversal of empowerment.

Black Lite Consulting managing director Ajay Lalu said Eskom’s approach was the correct one.

Eskom spokesman Khulu Phasiwe said the utility intended to arrange a meeting with Exxaro to understand why it was scaling down its BEE.