Special paper on Eskom outlines roadmap to put it back to health
R10.6bn in the year thanks to higher PGM volumes, combined with a higher US dollar basket (4E) price and a weaker rand. Normalised headline earnings a share (normalised Heps) rose by 226.7 percent to 270.1 cents a share. Heps were 15.8c a share and earnings a share jumped to 17.2c a share. Commenting on the results, Seleho Tsatsi, an investment analyst at Anchor Capital, said at face value the share looked expensive at a high multiple of trailing normalised Heps, which were adjusted for the black economic empowerment transaction.
“It’s important to note, however, that Northam is growing its volumes from 583 000 4E ounces in 2019 to just under 1 million 4E ounces over the next five years, with volume growth of 11 percent a year,” Tsatsi said.
The group’s equivalent refined metal output was up 7.4 percent in the period under review to 519 954 4E ounces with increased production at Booysendal and Zondereinde. Chrome output was 17.6 percent to 764 528 tons on growth at Booysendal and Zondereinde as well as the maiden contribution from Eland.
“Our operations are performing well and we expect to deliver further production growth in the new year. We’ll continue to focus on costs in order to grow our margins and maintain our relative cost production,” Dunne said.
The company said it had started wage talks with the Association of Mineworkers and Construction Union (Amcu), the majority union at Booysendal. THE GOVERNMENT will publish a special paper on Eskom, which will clearly outline the roadmap to put Eskom on a long-term sustainability path within the next few weeks, the public enterprises ministry said on Saturday.
“This paper will reflect the urgent work that is taking place to identify options to resolve the debt challenge, the process for restructuring Eskom and importantly, to ensure a just transition,” the ministry said.
Eskom was a key institution in the energy sector and a critical component of the South African economy.
“The lesson is clear: for growth, we need a reliable and sustainable supply of electricity. President (Cyril) Ramaphosa during his State of the Nation address in February 2019 announced that Eskom was too big and important for the government to let it fail. The president announced the restructuring of Eskom into three entities, starting with the creation of a transmission entity.”
This was a recommendation of the Presidential Sustainability Task Team based on international trends and a study conducted by Eskom and in line with government policy as outlined in the White Paper on Energy 1998. Eskom was also implementing some of the key recommendations of the technical review team to ensure power stations operate at optimal levels.
Stabilisation of generation was also critical. To ensure operational discipline, Eskom would deploy about 200 technical and engineering staff across the power stations. Power station managers would play a critical role to ensure proper maintenance and adequate supply of quality coal.
“To ensure Eskom is able to meet its financial obligations, the Minister of Finance (Tito Mboweni) announced an Eskom support package of R23 billion for the next three years during the Budget speech.
Furthermore, the minister tabled the Special Appropriation Bill to provide Eskom additional support of R59bn. The additional support (R23bn over three years adds up to 2019/20: R26bn and 2020/21: R33bn) brings the total amount to R128bn over a three-year period,” the ministry said.
The funding was conditional upon the establishment of the chief restructuring office headed by Freeman Nomvalo, that would deal with the power utility’s debt and interrogate various proposals to resolve Eskom’s financial problems.
Nomvalo had already started work. A number of options to resolve the debt and financial position was being evaluated by a team of experts. The key component of restructuring was the separation of transmission. Since the announcement of the separation, the government, in particular the president and Public Enterprises Minister Pravin Gordhan, had had initial engagements with unions.
The consultations on the future of Eskom were expected to be ongoing at Eskom management level and government level. The Eskom board and executive management, together with the government, would lead engagements at various levels.
“The energy sector is going through a global transition driven by new technologies and environmental concerns. It is critical that the transition is just, in that it must have a minimum impact on jobs and local economies,” the ministry said. | African News Agency (ANA)