10 December 2012

South Africa: Gigaba Leads Talks On Eskom's Emerging Miners' Strategy

Pretoria — Public Enterprises Minister Malusi Gigaba on Monday held talks aimed at enabling emerging miners to play a greater role in the supply of coal for power generation in the country.

Monday's meeting said Eskom followed engagement with established coal producers, Chamber of Mines and SAMDA who supported the direction of the strategy and will continue to work with Eskom and emerging miners.

"We seek to transform South Africa's coal mining industry at the same time as we ensure a secure supply of coal for domestic power supply. Eskom's long term coal supply requirements create significant opportunities for emerging miners to ramp up their participation in the industry," said Gigaba.

The meeting discussed challenges facing the industry while it also explored the potential for partnerships which would ensure that Eskom's future coal requirements can be met in ways which support transformation.

The power parastal has been working for the past few years to develop a long-term coal supply strategy which will ensure a secure supply of coal over the life of its power stations in the right volumes, at the right quality and at costs which the country can afford.

Eskom seeks a framework which will balance the need for domestic security of coal supply with the need for the coal export industry to thrive. Though Eskom has contracted 80% of its coal supplies out to 2018, it still needs to secure coal beyond that.

This will require significant investment in coal mining, and Eskom is committed to ensuring this is accompanied by transformation of the industry. In addition to coal, suppliers of inputs such as limestone will also be needed.

"We have looked at our need for coal going forward, and we want to see how we can ensure at the same time that we see fundamental transformation of the industry and assist the development of emerging coal miners," Eskom chief executive Brian Dames said.

"We would like to see the development of black-owned mining companies of size and scale, and who are in the industry for the long term," he added.

The Eskom's Black Emerging Mining Coal Strategy includes several pillars such as the creation of a Mine Development Fund where Eskom will look to partner with development finance institutions and private sector funders to support investment by black emerging miners in the development of resources.

It also looks at increasing black ownership as a means to transform the industry where Eskom will look to use its purchasing power to empower Black Owned suppliers and increase equity stakes to 50% + 1share.

It also looks at the consolidation of smaller black owned mining resources which will require identifying Black Owned mining resources that could be consolidated into larger entities for development among others.

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