Help Desk -
9717405332, 9599714297, 9810335381
Email
Password

Wescoal claims there are limits to which it can fill Eskom fuel void - CEO

Coal News - Published on Thu, 15 Nov 2018

Image Source: Miningmx
Mining MX cited Mr Waheed Sulaiman, CEO of Wescoal Holdings as saying that there was a limit to which additional coal could be sold to Eskom, the South African power utility company, because increasing production aggressively would hurt the firm’s ore reserves. He said in an interview that “There are opportunities to work with Eskom where it makes sense, but it’s not as straight forward as simply ramping up the mine.“We need to plan as we have pushed the mines quite hard in order to meet sales. But we have to look after our ore reserve management. It’s not sustainable,” he added.

Wescoal has an estimated 300 million tonnes (Mt) in coal reserves including some 60Mt in assets that are held for sale: its Intibane and Leeuw Brakfontein Colliery operations. Its core operating mines at Elandspruit and Vanggatfontein, and the Khanyisa collery located in Mpumalanga province. Sales in the half year period totalled 2.4Mt. Of this total Eskom sales were 1.9Mt compared to 1.3Mt in the corresponding period of the previous year.

Eskom told Bloomberg News that it was urgently trying to buy additional coal in order to help it avoid load-shedding. Coal inventories at some power stations in its fleet were still critically low. “Eskom is pursuing urgent coal purchasing from current suppliers and those suppliers that are currently not contracted,” Khulu Phasiwe, Eskom spokesman, told the news service on November 12.

Mr Sulaiman added that additional coal sales to Eskom did not automatically imply a significant premium either. “Eskom is not in a position to pay high premiums for coal because it has its significant cost pressures,” he said.

Improved export prices for thermal coal helped Wescoal to a strong interim showing. The company posted a 16% increase in headline share earnings of 23.5 cents and generated cash of R291m, an increase of 41% year-on-year. The company was able to cut expensive debt and has now laid down plans to restructure the balance sheet.

He said that “We are in the process of refinancing debt in order to lower our cost of capital. We will also look at additional debt such as normal long-term debt and some short-term facilities.”This was to build some financial firepower as the company looked for fresh acquisitions.

Source :

Posted By : Rabi Wangkhem on Thu, 15 Nov 2018
Related News from Coal segment