Whitehaven Coal sees higher prices on disruptions
The company's Blackwater and Daunia mines in Queensland, which it recently purchased from BHP, produced 4.8 million tonnes.
South Africa wants coal producers to help debt-stricken state power utility Eskom Holdings SOC Ltd. tackle its skyrocketing costs of the fuel — a problem that’s largely of its own making.
Eskom traditionally signed so-called “cost-plus” contracts for coal with mining companies that managed and operated shafts the utility helped finance. In 2015 then-Chief Executive Officer Brian Molefe criticized the model, saying the utility wanted to buy “the bread, not the entire bakery” and it increasingly began to enter into short-term supply agreements.
Eskom’s coal costs have risen almost 22% since 2016 as a result of the shift and rising international prices driven by increasing demand from India and China. The utility now concedes that it erred and says it has approved a long-term coal strategy “including the investment in cost-plus mines where required.”
Meanwhile the government wants coal producers to consider offering Eskom discounts on the more than 110 million tons a year of the fuel it burns. With supplies constrained and continued demand for exports, they have little incentive to make concessions.
(By Paul Burkhardt)
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