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Expert Seek Probe into Proposed South32’s SAEC & Seriti Resources Merger

Coal News - Published on Fri, 20 Sep 2019

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Citizen reported that the pending merger between two of its biggest coal suppliers, Australian mining house South32’s South African Energy Coal and Seriti Resources, has raised questions about whether the merger will make competitive procurement possible. Energy expert Mr Chris Yelland said that if the deal, which is estimated to be valued between USD 300 -350 million, is approved, Eskom would be returning to a market dominated by a select few companies that would take the lion’s share of Eskom’s business. He said “In the past there was definitely a case for introduction of diversity into a coal supply industry to Eskom and for export that was dominated by about five of the traditional coal majors. This move now seems to head in the opposite direction, returning to market dominance by a select few companies that take the lion’s share of Eskom’s business. This accounts for some 120 million tons a year out of a total production of about 250 million tons a year in South Africa.”

He said this concentration of the coal supply industry into a limited number of large coal mining companies posed some risk to effective competition in the sector, which the Competition Commission should investigate.

If the deal goes through and is approved by the Competition Commission, it is estimated that 45% of all coal purchased by Eskom would come from one supplier and 80% of all coal sourced from cost-plus mines will come from the same supplier.

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Posted By : Rabi Wangkhem on Fri, 20 Sep 2019
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