Page 9 - AfrElec Week 20 2021

AfrElec COAL AfrElec

SA’s Seriti Resources finally

acquires South32’s coal assets

SOUTH AFRICA SOUTH African black-owned miner Seriti Power Station, and this agreement provides that
Resources said that it had been cleared by the security of supply at a price that is affordable to
government and Eskom to acquire the coal assets Eskom,” André de Ruyter, group chief executive
of South32. of Eskom, said in a statement.
The final hurdle was Eskom’s consent to a new “Prior to this transaction being concluded,
coal supply agreement at its Duvha Power Sta- Eskom conducted an independent due diligence
tion. The deal was initially signed in November exercise on Seriti, led by a firm of attorneys.
2019. The sale is now expected to be completed Eskom is satisfied the new owners of SAEC have
on 1 June. the capacity to fully discharge their obligations
“Eskom has agreed to amend the existing to Eskom.”
terms and conditions stipulated in the Duvha Seriti is a 91% black-owned coal producer, so
Coal Supply Agreement, which is currently the deal dovetails with the government’s drive to
loss-making, adjusting the coal price to R550 raise black ownership in the mining sector.
per ton with effect from 1 June 2021, with an Seriti is not listed, and South African coal
annual escalation (from 1 January 2022) in line assets are increasingly being controlled by
with the Producer Price Index. The agreement unlisted companies. But Seriti is widely regarded
will run until 31 December 2024,” Seriti said in as a transparent and open company by non-listed
a statement. standards.
The deal has raised eyebrows because of the International companies are increasingly
price that Eskom will now be paying for the coal getting out of the coal space as investors raise
– a 32% increase – at a time when its financial concerns about the fossil fuel’s links to climate
situation is precarious. But the utility says it is change. South Africa and Eskom’s addiction to
affordable and provides security of supply, and it coal is also under intense scrutiny, with activists
said that the National Treasury has signed off on arguing in court that the failure to curb toxic lev-
the price increase. els of air pollution was a violation of the Consti-
“Of critical importance to Eskom is to secure tution. This is a burning issue that is not going to
the continued delivery of coal for the Duvha cool off any time soon.™

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