HomeIndustry SectorsGenerationEskom signs coal supply agreement with Sekoko

Eskom signs coal supply agreement with Sekoko

Eskom’s Matimba power
station “’ to be
supplied by Sekoko
Johannesburg, South Africa — ESI-AFRICA.COM — 02 February 2011 – Sekoko Coal (Pty) Limited “’ a South African-based, black-owned energy and minerals company developing the coal, magnetite iron ore and PGM projects “’ has signed a memorandum of understanding with South African power utility, Eskom, paving the way for its Waterberg coal project to supply Eskom’s Matimba power station in terms of a coal supply and off-take agreement yet to be concluded.

The Waterberg coal project is a Sekoko/Firestone Energy Limited joint venture near Lephalale in the Limpopo province. A Sekoko statement released here said coal production would start from an open pit at about 43 000tpm in April 2012, ramping up to 83 000tpm by April 2015. The coal produced from this project would be of a product mix quality, and was in high demand from steel manufacturers around the world, as it was the preferred feedstock for use in coal-fired powered stations, steel making and high-end custom coke manufacture.

The supply contract to Eskom will offer Sekoko Coal and its joint venture partner, Firestone Energy, a great opportunity to maximise value for their product, as well as to establish a track record for reliable, high-quality coal production.

The statement added that key aspects of the MoU were: a six-year term from the start of first coal production, expected April 2012; continued negotiation in good faith by Sekoko and Eskom with the objective of entering into a longer-term contract extension from 2018 to 2032; and delivery by the Sekoko JV of coal quantities based on Eskom’s excess coal requirements and burn plan, as applicable from time to time, and in line with the contract coal supply schedule.

Sekoko executive chairman, Timothy Tebeila said: “This development with Eskom puts Sekoko JV in an advantageous position, and it can now also proceed with the development of phase two of the Waterberg coal project and the procuring of the necessary financing.”