Arnot Mine to Supply Coal to ESKOM
IOL reported that South power producer ESKOM has entered into an agreement with Arnot OpCo (Pty) Ltd for the supply of coal for the Arnot Power Station. In terms of the agreement, Arnot OpCo will supply the full coal requirement for the life of Arnot Power Station. The coal is of high quality, and if the need arises, it may be used at other stations. The contract has an exit clause after six years that may allow both parties to cancel the contract.
The agreement serves to secure coal supply and to meet the burn requirements of the power station by conveyor belt, replacing the current supply by road from various sources on short- to medium-term contracts, some of which were signed under emergency and urgent procurement. This transaction paves way for Eskom to reduce the costs of operating the Arnot Power Station while securing high quality coal at affordable prices.
Arnot OpCo is half-owned by 1 038 former Exxaro Resources employees who were retrenched in 2015 from the Arnot Mine in Middelburg, Mpumalanga. JSE-listed Wescoal Holdings owns the other half of Arnot OpCo. These employees lost their jobs at the expiry of the previous coal supply agreement in 2015, which resulted in Exxaro decommissioning the mine. Since 2016, the former employees embarked on a process to acquire, reopen and to operate the mine.