Eskom has signed a coal supply deal with the Arnot mine, in a move that cements the revival of the shuttered operation.
The 10-year deal, which will supply the utility with 2-million tonnes of coal a year, will breathe new life into the mine, which is expected to produce its first tonnages by the end of the calendar year.
The coal supply agreement (CSA) marks the conclusion of months of negotiations with the power utility, which commenced mid-2020 after Arnot OpCo was launched by a consortium led by the retrenched workers of the Arnot Coal Mine.
The Arnot mine was previously owned by Exxaro Resources. It was decommissioned and its workers retrenched in 2015 when a previous coal supply agreement with Eskom was not renewed.
The utility went on to procure mainly from Optimum coal mine, which at the time was owned by the notorious Gupta family that stands accused of being at the heart of state capture in SA — a systemic political corruption that hollowed out institutions such as Eskom.
In 2019, when Eskom issued a tender for coal supply to the Arnot power station, Arnot OpCo submitted a proposal with a view to revive Arnot Colliery, and took over the operation in February 2020 upon winning the Eskom contract to reopen and operate the mine.
Through a trust, 1,038 of the retrenched employees now own 50% of Arnot OpCo while junior miner Wescoal owns the other half. As part of the new supply agreement, Arnot OpCo will deliver coal to Eskom’s Arnot Power Station through conveyor belts, which is critical to minimise the cost of coal delivery plaguing the power utility.
Eskom said the transaction paves the way for the utility to reduce the costs of operating Arnot while securing high-quality coal at affordable prices.
Arnot Opco CEO Bontle Aphane said the coal supply deal is a big boost for the mining company, its former employees and the community in which it operates.
“Before Arnot mine was shut down, it had been the primary source of income for many in this area. With this significant CSA signing, we plan to hire more people from the community, as well as former employees, improving their economic prospects again and increasing our staff complement.”
The company said that since it took effective ownership of the mine, its team had been working tirelessly to dewater the underground sections that were flooded and re-establishing the surface infrastructure in preparation to supply coal to the power station.
As large miners increasingly divest from SA coal, Eskom GM for primary energy, Sandile Siyaya, said the transaction also demonstrates that a mining asset curtailed by a major miner can be operated viably in the hands of a junior miner.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.