It is reported that ASX-LISTED Universal Coal is pitching to supply coal from its planned Kangala mine to Eskom’s Kusile power station despite the fact that Anglo American Coal holds the contract to supply Kusile.

Kusile is a 4,800MW power station situated near Delmas which will burn around 17 million tons of coal annually with the first generating set due to be commissioned by the beginning of 2015.

According to information on the Eskom website "Anglo Coal South Africa has committed, in a letter of intent, to supply the 17 million tons of coal over a period of 47 years through its empowerment subsidiary Anglo Inyosi Coal."

Eskom indicated the coal would come from the New Largo reserve with supporting production from Zondagsfontein. Yet, Mr Tony Harwood Universal CEO told financial media at a briefing in Johannesburg on Wednesday that his company was in off-take discussions with Eskom to supply coal from Kangala to Kusile.

Mr Harwood when asked about the situation regarding Anglo Coal holding the supply contract replied "Yes, I also thought Anglo Coal had the Kusile contract tied up, but the situation is that Eskom is keen to talk to us about accessing coal from Kangala."

He estimated the cost to Kangala at around AUD 60 million if a dual washing plant was needed to supply both the export and domestic markets and at around AUD 35 million if it supplied only Eskom.

He added the optimised BFS should be completed by the first quarter of next year which was also by when Universal expected to receive its mining right along the necessary environmental permits and water use licence.

Universal is currently optimizing the bankable feasibility study for Kangala and a contract to supply Eskom would have major impacts on the cost of the mine and its level of production.

Kangala is being planned as an operation which would produce 2.5 million tonnes run of mine annually.

(Sourced from miningmx.com)