Cape Town - Exxaro says Public Enterprise Minister Lynne Brown was instrumental in pushing the mining company out of Eskom’s supply contract.
Exxaro chief executive Mxolisi Mgojo told the portfolio committee on public enterprise where he gave evidence into operations at the power utility, that Brown blocked R1.8 billion in funding to the company’s Matla mine.
He told the committee that in 2016, the Eskom Board approved Exxaro’s request for funding for its Matla mine,which would have allowed it to stay in operation.
Matla is a cost-plus mine of Exxaro. Eskom has previously developed mines using a so-called cost-plus model, in which it would pay for the cost of mining operations run by companies, plus an agreed profit margin.
Brown wrote a letter to the then Eskom chairperson Ben Ngubane in which Exxaro claimed she blocked the intended funding.
Mgojo said: “Minister Brown required Eskom, before she would grant approval to demonstrate how Eskom would use this opportunity to give socio-economic transformation imperatives of the government as the Coal Supply Agreement was signed pre-1994”.
He further charged that the minister’s stance was surprising as the coal supply agreement was amended and affirmed after 1994, and no conditions were set in their coal supply agreements to which funding was subject to.
Exxaro said it informed Eskom from 2004 that capital was needed to sink a new shaft for Matla mine’s Mine 1 as it was becoming unsafe to mine at the existing shaft.
“Eskom delayed and has to date not provided Exxaro with the capital. We explained the adverse impact of the failure to fund the sinking of a new shaft for mine 1 to Eskom on a number of occasions. One such example is a letter that we sent to Mr [Brian] Molefe dated 15 September 2016,” added Mgojo.
The Matla mine is able to supply the Matla power station only 7.5 million tons of the 10.066 million tons a year which it is contractually obliged to supply.
Exxaro accused Eskom of inflating costs to justify their decision to work with Gupta linked Tegeta.
“If the necessary capital were supplied for mine 1, Matla mine would be able to supply coal at competitive rates for at least the next 20 years. While the relocation of mine 1 remains unfunded, one must assume that Eskom will continue to purchase coal from third parties at exorbitant prices,” said Mgojo.