Merger ‘will not affect’ Eskom coal demand
A merger between commodity trader Glencore and mining company Xstrata will have little bearing on Eskom’s increasing demand for coal and other issues affecting coal supplies and prices, said the Competition Commission’s Thembinkosi Bonakele.
Instead, specific trends identified during the investigations into the largest mining merger in years were set to continue — with or without the merger going ahead, he told the Competition Tribunal on Friday.
These issues included Eskom’s growing demand for coal to supply its power stations, an increase in the export of coal used for electricity generation, especially to India, and the expiry of Eskom’s long-term coal contracts with coal mines.
Explaining to the tribunal why the commission decided to recommend the conditional approval of the transaction, Mr Bonakele said the issues had to be addressed at policy level and the commission had already engaged with the government departments responsible for policy in this area, including the Department of Public Enterprises.
On Friday the tribunal concluded its public hearing into the $33bn merger after Eskom and the National Union of Metalworkers withdrew their intervention applications following a confidential agreement between Eskom and Glencore. Eskom applied to intervene because of concerns of possible coal supply shortages, a reduction in the quality of coal supplied by the merging parties and a rise in the export of coal which would possibly cause domestic coal prices to increase.
Evidence by Eskom executive Kiren Maharaj showed that three power stations — Hendrina, Komati and Majuba — received coal from both Glencore and Xstrata. But she conceded during cross-examination by counsel for the intervening parties, David Unterhalter SC, that Eskom had secured long-term contracts and that it did have alternative suppliers in the eMalahleni area.
She raised concerns about future supplies in Mpumalanga and said Eskom had to look to Waterberg for additional supplies, although coal from Waterberg was not a "direct match" to the needs of the three power stations.
Tribunal chairman Norman Manoim said a decision would be announced in due course.
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