Losing friends
and influence
Anglo American is one – and it already
supplies Eskom with large amounts of
coal but wants out. It understands
Eskom well: for many years it built its
coal business on selling to the power
utility, while other companies were
concentrating on building their
exports.
In response to Eskom’s decision, the
mining major said: “from our point of
view the domestic supplies (to Eskom)
have been good business, but no longer
are major in our portfolio.
Anglo American may sell its
South African domestic coal business.”
The portfolio is estimated at
US$1.5 billion, 30% of the coal
produced is sold to Eskom. In the
wings as a potential buyer, but clearly
ready to take centre stage, is the totally
black-owned Pembani Group, which
already has investments in BHP Energy
Coal South Africa, Exxaro Resources
(number two to Anglo American in the
South African mining industry) – and
is owned by Anglo American
Non‑Executive Director Phuthujma
Nhleko. It also has an association with
the Shanduka Group, created by
Cyril Ramaphosa, now
Deputy President of South Africa.
Ramatlhodi recently told a group
of investors in London that, as
Anglo American and BHP Billiton had
“outgrown” South Africa by listing in
London, it was time for another
company to step up and establish a
similar presence in the industry but
with a “foot in the community”. “We
are working on it in collaboration with
the guys who are pulling out,” he said.
BHP Billiton, Glencore and Exxaro
are three more companies which
supply Eskom. So far, Eskom has
alienated all three. BHP Billiton, the
world’s largest mining company, is
washing its hands of South Africa and
hiving off its coal mines into a separate
company, South32, which might do a
deal with Eskom in its own right.
“South Africa’s remaining mineable
coal is deeper and more expensive to
mine. Eskom’s people cannot seem to
get their heads around that,” a Glencore
executive said and was immediately
labelled by Eskom as uncooperative.
Exxaro is already hugely exposed to
Eskom. The mining company's coal
business with the utility accounts for
more than 90% of its coal revenues.
Strategically, it is almost certain that
neither of the two would want to
become more exposed to the other. The
only comment from Eskom was that
there was no crisis. It was not as if
South Africa was going to run out of
coal.
Note
Since this report was written,
Anglo American South Africa (AASA) has
made significant changes to its leadership
structure with Mark Cutifani, the Group
CEO of Anglo America, assuming the role
of Chairman of AASA. Norman Mbazima,
CEO of Kumba Iron Ore, will take on the
role of Deputy Chairman of AASA, while
Andile Sangqu joins the company in the
newly established role of Executive Head of
AASA. “These are important changes and
demonstrate Anglo American’s commitment
to playing an active and leading role in
the ongoing development of a responsible,
sustainable and competitive business and
mining sector in South Africa,” Cutifani
said.
June 2015
|
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