Optimum Coal commences business rescue proceedings
Johannesburg, South Africa 4 August, 2015
Glencore announces that the directors of its subsidiaries, Optimum Coal Holdings and Optimum Coal Mine (Optimum), have resolved to commence business rescue proceedings and place both companies under supervision given continued and unsustainable financial hardship.
Optimum has over the last 6 months taken various steps to restructure its operations and reduce its costs, including downscaling its operations and reducing its production. Optimum has, however, continued to suffer financial hardship as a result of its agreement with Eskom.
Optimum is contracted to supply 5.5 million tons per annum to Eskom following an agreement signed in 1993. This agreement has resulted in Optimum supplying coal to Eskom at a cost significantly less than the cost of production for a number of years.
Optimum has engaged in extensive discussions over the years with Eskom to renegotiate the agreement to a level which is sustainable for both parties, including securing the supply of coal to Eskom until the end of the estimated life of the Hendrina power station in 2023.