South Africa’s major power producer, Eskom is planning to halve the mandatory minimum amount of coal it will receive each month from the Optimum coal mine in Mpumalanga, in order to provide a much needed financial life-line to the mine.
The power major is currently discussing the proposal to cut monthly coal supply from 400,000 MT to 200,000 MT, with the provision to negotiate for the price that the utility would pay.
Optimum’s coal operations had came under scrutiny, when the owners had failed to pay the employees for a second consecutive month in Mar’18, prompting the National Union of Mineworkers (NUM) to seek business rescue practitioners (BPRs) of its own in an effort to save jobs.
Optimum’s coal production cost of 250 Rand/MT, was higher than the actual selling price of 201 Rand/MT, to Eskom. Hence, the BPR’s were envisaging to revise the supply agreement with the power utility.
Earlier in the month, the coal mine (Optimum) had reported to have agreed an export agreement with Vitol for at least 200,000 MT coal, which in turn requires Eskom to lower its share of coal intake.
Eskom’s Ongoing Coal Shortage:
Eskom’s may hold its decision to cut coal supply from the Optimum mine, as the power utility was facing coal stocks below required target of 25 days at its 7 power stations.
However, the company had assured that proper recovery plans had been taken which includes securing additional coal supplies for the affected stations and a further redirection of coal stock is underway to address the imbalance.
Eskom is set to hold a media briefing on 3 May’18 where it will share its winter plans, the period during which the electricity usage is traditionally high.
South African Coal Offers:
South African coal prices continued its stay at higher side, with not much movement seen during the week. Coal Index API-4 was assessed at USD 94.10 for May’18 loading.
South African 5500 NAR coal was offered at a discount of USD 5/MT, and for 4800 NAR the discount was USD 12.5-13/MT.
An Indian trader had shared the landed cost of 5500 NAR coal, at USD 93.7/MT, while the same offer for 4800 NAR coal stood USD 76.5/MT, for a capsize vessel in Gangavaram port.
Leave a Reply