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Eskom and Exxaro Arnot mine coal supply agreement to end

Published by
World Coal,

Since 2013, Exxaro and Eskom have been in discussions about the coal supply agreement (CSA) at the Arnot coal mine in terms of which Exxaro has been supplying coal from the mine to the Arnot power plant in Mpumalanga, South Africa.

Due to a disagreement between Exxaro and Eskom on the expiry date of the CSA, a MoU was concluded and decided that both companies would jointly optimise the Arnot mine operations for the supply of coal beyond 2015.

While in discussions as per the MoU, on 8 September, Eskom advised Exxaro that the CSA will terminate on 31 December 2015 and instructed Exxaro to start the process of closure of the Arnot mine. Since this, both companies have been discussing the next steps for the mine and their relations to it, including the the closure process and procedures to carry out when moving forward.

On 3 November in a meeting between senior executives, Eskom confirmed verbally that they will no longer be off-taking any coal from the Arnot mine after 31 December 2015.

Exxaro will therefore have to initiate appropriate activities occasioned by this decision from Eskom. Further, as a captive (cost plus) mine, Exxaro is a mining right holder and Eskom owns the Arnot mine movable and immovable assets and therefore Eskom is liable to defray all costs related and incidental to the closure of the mine.

In a press release, Eskom has indicated it is conscious and concerned about the potential for negative consequences on Arnot mine employees. Both companies are continuing discussions in order to attain a joint closure solution as prescribed in the CSA.

Edited from press release by Harleigh Hobbs

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