Hendrina power station
“’ will again receive
coal from Optimum
 
Johannesburg, South Africa — ESI-AFRICA.COM — 15 April 2011 – South African miner Optimum Coal has resolved its contract dispute with Eskom Holdings, and says it will be continuing to supply coal to the national power utility.

Optimum Coal reached an agreement in 2008 to supply state-owned Eskom’s Hendrina power station with 5.5Mtpa of coal.

The company issued a notice to cancel the deal in May last year, saying Eskom was in breach of the contract and owed it R22 million. Eskom disputed the claim.

“We have amicably resolved the issue in respect of which we were engaged in arbitration with Eskom,” the company said in a statement issued here. “Consequently the arbitration has been withdrawn, and the company has withdrawn its cancellation of the Hendrina coal supply agreement.”

Optimum Coal also said it had agreed with Eskom to amend the terms of the contract, on the basis that an increased penalty became payable by the company in respect of any coal delivered to Eskom which did not comply with the agreed parameters.

The company, which is one of South Africa’s largest producers, added that it had produced
4.1 Mt of run-of-mine coal in the three months to end-March.

It said state-owned Transnet’s freight rail unit planned to shut down its line to Richards Bay coal terminal for a 20-day maintenance shutdown from May 23 to June 11.

“We are in the process of finalising operating initiatives to optimally manage cost and associated working capital impacts during this shutdown period,” chief executive Mike Teke said.