Optimum Coal fine: Eskom sticks to its guns

Johannesburg – Eskom has said it expected the Gupta-owned Tegeta Exploration and Resources, the new owners of Optimum Coal Mine, to pay the R2.3 billion penalty it imposed on Glencore last year for breaching its contract to supply cheap coal to its Hendrina power station.

The utility said the fine would stay in place despite the change of ownership from Glencore to Tegeta.

Eskom spokesman Khulu Phasiwe yesterday said the utility expected the new owners to pay as they had taken over the mine on existing conditions.

Read: ‘We grilled Guptas on Glencore deal’

“We expect the new owners to continue with the contract until 2018 and this must be supplied at R150 per ton. There should be no deviation in terms of coal quality and quantity,” Phasiwe said.

Deal approval

Eskom’s stance comes in the wake of the Competition Commission’s conditional approval of the deal yesterday, after the National Union of Mineworkers (NUM) fiercely protested the transaction on the grounds that it would lead to further job losses at the mine.

Tegeta is jointly owned by Oakbay Investments and Mabengela Investments – a company in which President Jacob Zuma’s son Duduzane, has a stake.

The commission said it had recommended the approval of the acquisition on condition that Tegeta would not effect any retrenchments.

It said the proposed transaction was unlikely to prevent or lessen competition in the thermal coal market as the merging parties were smaller players in this market and faced competition from larger rivals such as Anglo American, Exxaro Coal and South 32.

Spokesman Itumeleng Lesofe said the commission imposed the conditions as the proposed merger raised public interest and concerns from other parties.

“The commission has recommended that the proposed transaction be approved on condition that the merging parties will not retrench any employees of the target firms as a result of the merger,” Lesofe said.

Glencore placed Optimum in business rescue last year after Eskom refused to ease the terms of a supply contract to the Hendrina power station.

When the transaction is completed, Tegeta will acquire Optimum and six other companies: Optimum Coal Terminal, Koornfontein Mine, Optimum Nekel Mining and Exploration, Optimum Vlakfontein Mining and Exploration, Optimum Overvaal Mining and Exploration and Optimum Mpefu Mining and Exploration.

Phasiwe said Eskom would also not waive the R2.3bn claim against Optimum for breach of contract.

“We have indicated to Optimum that the penalties on them remain,” he said.

The NUM yesterday said it welcomed the approval of the merger as it addressed its core concerns of job losses.

“We are happy that the commission has put that condition. We have been concerned about retrenchments at Optimum,” said spokesman Livhuwani Mammburu.