Tegeta will honour the original coal supply contract Optimum coal mine had in place

The relationship between SA power utility Eskom and mining giant Glencore continues to deteriorate as Eskom on Tuesday revealed it is seeking a R2 billion penalty from Glencore for its poor quality coal.

Glencore is disputing Eskom’s claims however saying the coal it supplies to Eskom from its Optimum colliery is of a high standard.

Talking at its annual financial results, Eskom acting CEO Brian Molefe said Eskom wants its power stations to perform better and wants Glencore to pay R2 billion in penalties for supplying poor quality coal which has resulted in “shoddy” performance at its associated power station.

Because of the coal supply agreement between Eskom and Glencore, both parties are theoretically tied into the supply and receipt of Optimum’s coal, regardless of its quality.

Glencore is not only disputing Eskon’s allegations but has much bigger problems on its hands. Last week it announced it had commenced business rescue proceedings at Optimum following attempts to renegotiate an old supply agreement (first signed in the 80s and renewed in the 90s), with Eskom, which the power utility declined to review.

Prior to this, the DMR suspended Optimum’s mining licence, because the company’s retrenchment of workers was so “inhumane”. The suspension has been temporarily lifted following discussions with minister Ngoako Ramatlhodi on Friday.

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