Sekoko coal signs offtake MoU with Eskom

Sekoko Coal announced today that the company has signed a Memorandum of Understanding (MoU) with South African power utility, Eskom. The MoU creates an enabling scenario for their Waterberg coal project to supply Eskom’s Matimba power station in terms of a coal supply and offtake agreement yet to be concluded.gravel and stone companies in nigeria

The Waterberg coal project is a Sekoko/Firestone Energy Limited joint venture near Lephalale in South Africa’s Limpopo Province. Coal production will start at about 43,000 tonnes per month in April 2012 from an open pit, ramping up to 83,000 tonnes per month by April 2015. The coal produced from this project will be of a product mix quality, and is in high demand from steel manufacturers around the world as it is the preferred feedstock for use in coal-fired powered stations, steel making and high-end custom coke manufacture.

The supply contract to Eskom will offer Sekoko Coal and its joint venture partner, Firestone Energy, a great opportunity to maximise value for their product as well as to establish a track record for reliable, high-quality coal production. Key aspects of the MoUinclude asix-year term from the start of first coal production (expected April 2012); Sekoko and Eskom will continue to negotiate, in good faith, with the objective of entering into a longer-term contract extension from 2018 to 2032; Sekoko JV will deliver coal quantities based upon Eskom's excess coal requirements and Eskom's burn plan as applicable from time to time, and in line with the contract coal supply schedule.

Sekoko’s Executive Chairman, Timothy Tebeila said: “This development with Eskom puts Sekoko JV in an advantageous position, and it can now also proceed with the development of phase two of the Waterberg coal project and the procuring of the necessary financing.

"In addition,” Tebeila added, “this MOU marks the largest commitment Eskom has ever made to an emerging black-owned Limpopo-based junior coal mining company at the Matimba power station, clearly indicating that Eskom is serious about introducing a second coal supplier in the Waterberg District’s Lephalale area; and this positions Sekoko to be the second coal supplier to Eskom’s power stations after Exxaro has been a sole supplier for more than 20 years in the region.”