Eskom in deal on coal supply to Medupi

EXXARO Resources said yesterday it had signed a definite agreement with Eskom for the supply of coal for its planned Medupi power plant.

EXXARO Resources said yesterday it had signed a definite agreement with Eskom for the supply of coal for its planned Medupi power plant.

The agreement was under review after Eskom had asked Exxaro to examine parts of the contract, including the coal price escalation mechanisms and the delivery ramp-up.

The 4800MW Medupi plant is Eskom's first new power plant in two decades, with the first of its six 800MW units expected to be commissioned by April 2012.

"The delivery of the first coal is planned for the second quarter of 2012, with a ramp-up to full production by 2015," Exxaro said.

The company said it had resumed the funding programme and placement of contracts for the Grootgeluk expansion project, meant to feed Medupi about 14,6million tonnes of coal a year over 40 years.

Exxaro said that the delay had raised the cost of the expansion project to R9,5billion from R9billion.

Medupi will help ease a chronic power shortage in South Africa, where outages in 2008 forced mines and smelters to shut for days and cost the economy billions of rands. - Reuters

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