Eskom and Anglo squabble over cost of coal

South African state-owned utility, Eskom, has urged Anglo American in improve the performance at its New Denmark coal mine. The total cost of coal from New Denmark, which supplies the Tutaka power plant, was ZAR1600 per tonne for April and May 2016, Eskom said.

This includes the total cost of operating the mine, as well as amortisation costs of historical capital expenditure – but is more than double Eskom’s average cost of coal.

“The investment in the New Denmark Colliery was done on a cost-plus basis with an intention of providing a strategic advantage to Eskom and the country in relation to security of supply and pricing,” said Eskom in a statement.

“This arrangement is currently not yielding the intended benefits. Eskom therefore urges Anglo American to radically change the performance of the mine to be in line with intended expectations.”

For its part, Anglo American said that it invoiced Eskom an average of ZAR668 per tonne for the period April 2015 – March 2016, “in line with the contract, mine progress and agreed budget between Eskom and Anglo American”.

Tutuka power plant in Mpumalange Province has a total installed capacity of 3654 W split across six 609 MW units. It has averaged production of 19 765 GWh over the past three years.

Edited by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/coal/12072016/eskom-and-anglo-squabble-over-cost-of-coal-2016-2014/