JOBURG INDABA
Eskom urged to return to cost-plus coal mines to save itself and the industry
South32 COO Mike Fraser said coal was expected to remain a big part of the SA energy mix
Coal miners have called on Eskom to revert to cost-plus mines to save both the industry and itself. Speaking at the 2018 Joburg Indaba on Tuesday, South32 COO Mike Fraser said coal was expected to remain a big part of the SA energy mix and a significant portion of Eskom’s costs. Because of this, reverting to long-term contracts would be mutually beneficial for both Eskom and for the coal industry, Fraser said. Senior coal analyst at XMP Consulting Xavier Prévost said that while there were enough coal resources in the ground investment was desperately needed. The price of coal had increased 100-fold since 2007, Prévost said. As such, "cost-plus mines are a must — that will control the prices, otherwise nothing will". Modest Margin In the past, "cost-plus" mines had been built in conjunction with Eskom on the condition that coal would be supplied to the utility at cost with a modest margin on top. But former Eskom CEO Brian Molefe announced his intention to break ties with such mines....
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