Eskom in coal price suicide as demand spurs costs
The surge in Eskom’s coal price is of the company’s own doing, a senior coal analyst at XMP Consulting, Xavier Prévost, has said, as the struggling utility expects to pay sharply higher prices for coal.
Eskom last month projected it would pay 20 percent more for its coal this financial year, after being forced into more expensive short-term supply contracts as cost-plus mine production declined.
At the release of Eskom’s year-end results, Public Enterprises Minister Pravin Gordhan lashed out at the 17 percent coal price increase, including that Eskom paid 14 percent more per ton in the financial year ending March 31, up sharply from its initial target for a 9 percent cost increase.
Gordhan said: “We need to have tough talks as to whether they are serving the national interest. This triple inflation number is not acceptable. I intend to engage with the industry.”
Prévost believed the main culprit of coal price increases was not the mines, but Eskom itself.
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