London — South32's deal to sell its South African Energy Coal (SAEC) assets to Mike Teke's Seriti group is at risk if negotiations with state-owned utility Eskom over increasing the price for supply of coal from South32's Wolvekrans-Middelburg Colliery (WMC) to the Duvha power station are unsuccessful, a spokesperson for Seriti confirmed Friday.
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"The parties to the sale agreement require that the Duvha Coal Supply Agreement be restructured into a commercially sustainable arrangement, the terms of which need to be acceptable to each of the parties," a spokesperson for Seriti told S&P Global Platts.
Discussions on the WMC supply contract have been ongoing with Eskom since June 2019.
WMC has been delivering coal to Eskom's Duvha power station for a price close to Rand 200/mt, well below the average of around Rand 600/mt for the majority of coal that Eskom's other power stations consume.
South32's CEO Graham Kerr said in a statement Thursday: "We still have to work through a process getting both Eskom and the National Treasury happy and getting something that is in best interests of Seriti and the country."