Business Maverick


Eskom agrees to Duvha power supply deal, paving the way for Seriti to acquire South32 coal assets

Eskom agrees to Duvha power supply deal, paving the way for Seriti to acquire South32 coal assets
The Duvha Power Station in Mpumalanga is a coal-fired power plant operated by Eskom. (Photo: Gallo Images / Foto24 / Lauren Mulligan)

The deal has raised eyebrows because of the price that Eskom will now be paying for the coal – about a doubling of the price – at a time when its financial situation is precarious.

Seriti Resources said on Monday that all of the hurdles had now been cleared to allow it to acquire the coal assets of South32 SA. The final hurdle was Eskom’s consent to a new coal supply agreement at its Duvha Power Station.

The deal was initially inked in November 2019, but some acquisitions take time. The sale is now expected to be completed on 1 June, with Seriti acquiring the majority stake in South32 SA Energy Coal Holdings (Pty) Ltd (SAEC).

“Eskom has agreed to amend the existing terms and conditions stipulated in the Duvha Coal Supply Agreement, which is currently loss-making, adjusting the coal price to R550 per ton with effect from 1 June 2021, with an annual escalation (from 1 January 2022) in line with the Producer Price Index. The agreement will run until 31 December 2024,” Seriti said in a statement.

The deal has raised eyebrows because of the price that Eskom will now be paying for the coal – a 32% increase – at a time when its financial situation is precarious. But the utility says it is affordable and provides security of supply, and it said that the National Treasury has signed off on the price increase.

“Of critical importance to Eskom is to secure the continued delivery of coal for the Duvha Power Station, and this agreement provides that security of supply at a price that is affordable to Eskom,” André de Ruyter, group chief executive of Eskom, said in a statement.

“Prior to this transaction being concluded, Eskom conducted an independent due diligence exercise on Seriti, led by a firm of attorneys. Eskom is satisfied the new owners of SAEC have the capacity to fully discharge their obligations to Eskom.”

Seriti is a 91% black-owned coal producer, so the deal dovetails with the government’s drive to raise black ownership in the mining sector. Seriti is not listed, and South African coal assets are increasingly being controlled by unlisted companies. But Seriti is widely regarded as a transparent and open company by non-listed standards. 

International companies are increasingly getting out of the coal space as investors raise concerns about the fossil fuel’s links to climate change. South Africa and Eskom’s addiction to coal is also under intense scrutiny, with activists on Monday arguing in court that the failure to curb toxic levels of air pollution was a violation of the Constitution. This is a burning issue that is not going to cool off any time soon. DM/BM


Comments - Please in order to comment.

  • Johan Buys says:

    CORRUPT. The mine had a dog contract, it is worth nothing. Yes the energy crisis needs the mine to operate sustainably.

    that could be achieved with transfer for zero consideration to Eskom and that it then appoint an operator at a fixed price per tonne for extract and deliver.

  • Brian Cotter says:

    An Eskom feed conveyor belt contract is much more preferable that these trucking delivery contracts which cost the tax payer additionally for roads etcetera. The mine has operated for a long time and ownership changes also so unbalanced cost per tonne was possible.

Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

A South African Hero: You

There’s a 99.8% chance that this isn’t for you. Only 0.2% of our readers have responded to this call for action.

Those 0.2% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.2%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options