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Eskom says might shun Anglo American to look for cheaper coal

“It’s unacceptable and we will change and we will go to unconventional suppliers”

South Africa’s Eskom is paying too much for the coal it buys from one of Anglo American’s mines and will shop around for a cheaper source, an executive at the power utility said on Tuesday.

“It’s unacceptable and we will change and we will go to unconventional suppliers,” Eskom’s Group Executive for Generation Matshela Koko told reporters.

Anglo’s New Denmark Colliery is the most expensive coal supplier to Eskom, Koko told Reuters.

Eskom’s Tutuka power station was paying Anglo American R1,600 ($109) per tonne, said Koko. However, Anglo’s spokesman Moeketsi Mofokeng said the company charged Eskom an average of R668 per tonne during the last financial year.

European coal futures traded around $58.90 per tonne at on Tuesday.

Eskom, which had faced a funding shortfall and struggled to keep the lights on in Africa’s most industrialised economy, said it posted a net profit of R4.6 billion in the year to March from R0.2 billion in the previous year.

The utility also said it had secured 57% of the funding for its 2016/2017 financial year.

Eskom had received R23 billion in the 2015/2016 financial year which ended in March through government loans and an equity injection.

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