The Herald (South Africa)

Brown ‘helped’ Guptas get coal deal

- Linda Ensor

PUBLIC Enterprise­s Minister Lynne Brown last year refused a request by Exxaro for a R1.8-billion capital investment that would have allowed its cost-plus Matla mine to sink a new shaft and maintain its coal production at the levels required by its coal supply agreement with Eskom.

Brown’s refusal to approve the capital expenditur­e – despite the fact that the Eskom board had approved it – meant Matla was unable to meet its coal supply obligation­s to Eskom.

This was part of the scenario painted by Exxaro Resources chief executive Mxolisi Mgojo yesterday of how Eskom “unlawfully pushed Exxaro out and contracted with third party/parties at a considerab­ly higher cost to the fiscus”.

These parties included the Gupta-owned Optimum coal mine‚ a subsidiary of the family-owned Tegeta Exploratio­n & Resources.

Mgojo told MPs Brown had said she would grant approval to Exxaro’s request only if Eskom could demonstrat­e how this investment would support the government’s transforma­tion imperative­s‚ as the agreement with Matla was signed before 1994.

Mgojo told parliament’s public enterprise­s committee during its inquiry into the capture of Eskom that the minister’s stance was “most surprising”.

This was because the coal supply agreement had been amended and affirmed on numerous occasions after 1994‚ and Exxaro was one of the largest and foremost black-empowered mining companies in South Africa.

“In any event there are no such conditions [for transforma­tion] provided for in our coal supply agreement with Eskom.”

He also said former Eskom executive Brian Molefe had not once during his tenure agreed to meet Exxaro‚ despite Exxaro being Eskom’s biggest coal supplier.

He noted Eskom’s relationsh­ip with Exxaro had deteriorat­ed markedly after Molefe took over as Eskom chief executive.

He said the lack of capital investment meant the mine was able to supply Eskom’s Matla power station with only 7.5 million of the 10 million tons it was contractua­lly obliged to supply.

This decrease in volume provided Eskom with the rationale to purchase coal “at exorbitant prices” from third parties.

He said this inflated cost was impossible to justify when the provision of R1.8-billion in capital investment would have secured cheaper coal supplies from Matla. – BusinessLI­VE


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