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Eskom is in the process of developing a strategy, supported by government, which would enable emerging miners to play a greater role in the supply of coal for power generation in South Africa, and take transformation in the industry to a new level.

As part of the process of finalising that strategy, Minister of Public Enterprises Malusi Gigaba has today led an engagement with emerging miners, to discuss the challenges facing the industry, and explore the potential for partnerships which would ensure that Eskom‟s future coal requirements can be met in ways which support transformation.

Today‟s meeting followed an engagement with established coal producers, the Chamber of Mines and SAMDA who supported the direction of the strategy and will continue to work with Eskom and the emerging miners to unfold it.

“We seek to transform South Africa‟s coal mining industry at the same time as we ensure a secure supply of coal for domestic power supply,” said Minister Gigaba. “Eskom‟s long term coal supply requirements create significant opportunities for emerging miners to ramp up their participation in the industry.

Eskom has been working for the past few years to develop a long term coal supply strategy which will ensure a secure supply of coal over the lives of its power stations, in the right volumes, at the right quality, and at costs which South Africa can afford. It seeks a framework which will balance the need for domestic security of coal supply with the need for the coal export industry to thrive. Though Eskom has contracted 80% of its coal supplies out to 2018, it still needs to secure coal beyond that. This will require significant investment in coal mining, and Eskom is committed to ensuring this is accompanied by transformation of the industry. In addition to coal, suppliers of inputs such as limestone will also be needed.

“We have looked at our need for coal going forward, and we want to see how wecan ensure at the same time that we see fundamental transformation of the industry and assist the development of emerging coal miners,” said Eskom CE Brian Dames. “We would like to see the development of black-owned mining companies of size and scale, and who are in the industry for the long term,” said Dames.
Eskom‟s Black Emerging Mining Coal Strategy includes five pillars:

1. Creating a Mine Development Fund: Eskom will look to partner with development finance institutions and private sector funders to support investment by black emerging miners in the development of resources.
2. Using coal trading as an option to secure coal resources and enhance transformation: Coal trading can be used to develop Black Owned companies in coal beneficiation and processing.
3. Increasing Black Ownership as a means to transform the industry: Eskom will look to use its purchasing power to empower Black Owned suppliers and increase equity stakes to 50% + 1share.
4. Utilising commercially acceptable levers to increase Black ownership: This will require discussions with established industry players to increase black ownership and participation
5. Consolidation of smaller Black Owned mining resources: This will require identifying Black Owned mining resources that could be consolidated into larger entities for development