EFF STATEMENT ON OPTIMUM COAL, GLENCORE SUBSIDIARY, DECISION TO SUSPEND ITS CONTRACT TO SUPPLY ESKOM WITH COAL
21 August 2015
The EFF note the decision by Optimum Coal, a Glencore subsidiary, to cut its coal supply to Eskom Hendrina Power Station (see report). We would like to express our disgust and shock at the opportunistic behaviour of Glencore. The decision comes within 24 hours of Glencore recording a dramatic half year loss which wiped out a total of $3 billion (R39 billion) in market share.
We do not believe Glencore claims that the operations at their Optimum Coal is not profitable. We do acknowledge that, the mining sector has been in crisis post 2008 financial crisis and there is no sign of recovery in the immediate future, mainly due to their own doing and greed.
What is of serious concern is that, for many years mining multinational corporations like Glencore, BHP Billiton, Exxaro, Anglo American Platinum Limited, Lonmin, and others have been operating under profitable conditions made possible by slave wages, boom in commodity prices and illicit financial flows. It is evident that companies want to operate under similar conditions created under the Apartheid regime and sustained under the ANC government.
At first signs of turbulence and threats to exorbitant profits, mining capital demand that the environment to change for their obscene profiteering to continue, but when workers strike for decent and well deserved wages as it happened in Marikana, they are told it will increase operation costs and discourage investment. When the minerworkers persisted with their wage demands, Lonmin called their friends in the ANC government to kill them.
We note the demand by Glencore, that Eskom must sign a new agreement that will allow for continuation of supply of coal, but at a ‘cash cost of production’. It is important to note that, coming from a well-known organized crime multination group like Glencore, this is not a surprise and a clear strategy to corner Eskom into signing extremely exorbitant agreements that will drain Eskom’s cash resources.
The only reason Glencore is calling for a new agreement, under ‘cash cost of production’, is precisely because recently Parliament approved a bailout allocation of R23 billion to Eskom and Eskom reported that they raised more than R50 billion on loans from financial markets. Had Eskom not receive these financial bailouts, Glencore wouldn’t have raised all this matters of their operations making losses.
Since Cyril Ramaphosa established the war room to stabilize Eskom through the government 5 point plan, it is Glencore that has come up strongly to demand more money from Eskom despite poor quality coal they continue to supply poor quality coal.
We believe, Glencore is using Cyril Ramaphosa political influence as a former executive board member of Glencore and the continued relationship between Glencore and Ramaphosa’s Shanduka to corner Eskom into unreasonable and unsustainable agreements that will take us back to the days when Eskom could not afford necessary maintenance due to lack of funds.
The EFF call on Eskom and the acting CEO Mr. Brain Molefe to do the right thing and not enter into any contracts with Glencore subsidiaries Optimum Coal, under the pretence of unsustainable operations, when all they want is to increase their profits.
Molefe must investigate all other agreements between Eskom and all Glencore subsidiaries, and cancel all agreements were Glencore supplies poor quality coal and charge the power utility exorbitant prices.
As the EFF in Parliament, we will write to the Minister of Finance and the Minister of Public Enterprise to request detail report on the R23 billion bailout to Eskom from government on a quarterly basis, to ensure that Glencore and Ramaphosa do not steal more money from government.
Statement issued by the Economic Freedom Fighters, August 21 2015
