HomeEnergy MineralsNew Largo might not be ready for Eskom’s Kusile power station

New Largo might not be ready for Eskom’s Kusile power station

Eskom chairman Zola Tsotsi believes that Anglo American’s New Largo project might not be ready in time to supply coal for the Kusile power station.

“We are having an almighty struggle with Anglo around the Kusile coal supply because there are certain things that we demand must happen and Anglo has got its own ideas,” Tsotsi said. “We’ve been back and forth for the last couple of years to the extent that that mine will not be ready when Kusile starts up.”

New Largo hasn’t begun development yet, and there has been no indication as to when development will start, Tsotsi added, despite Anglo American’s plans to supply 5 mtpa of coal from 2019 onwards.

“There’s been no traction on this matter for a long time and we just think that there are people below Mark who want to pull in the opposite direction. We’re trying to get things to move forward but it’s taking too long,” he said.

The delay has been attributed to confusion surrounding Anglo America’s black empowerment status, which the company believes it has met through the 27% stake that its partner Inyozi consortium has in New Largo. Eskom, however, is demanding 50.1% black ownership.

“They expected his company to be 50.1% black-owned in order to meet Eskom’s requirements which, of course, is nonsense,” said Peter Leon, Head of Webber Wentzel Attorneys mining and energy unit.

“It shows you how far this has gone and the thinking in state-owned enterprises. It points to a broader issue of the impact of amendments to BEE codes. The trumping provision is that the mining charter has to yield to what the DTI prescribes.”

Nevertheless, Anglo American has assured investors that every effort is being made to meet the New Largo timeline goals. “We are committed to exploring opportunities that promote broader participation in the domestic coal mining industry. We continue to remain committed to the development of the New Largo Project and earlier this year have begun having regular discussions between Anglo American Inyosi Coal and Eskom.”

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