Eskom has agreed to pay a higher price for coal for its Duvha Power Station.
This will pave the way of
sale of South32 SA Energy Coal to Seriti Resources.
Since 2019, the coal miner has claimed that it was selling coal to Eskom below its cost of mining.
Eskom has approved a higher coal price supply the Duvha power station in Mpumalanga.
This will help pave the way for the sale of South32 s SA Energy Coal (SAEC) to black-owned Seriti Resources.
SA Energy Coal, which is majority-owned by Australia-based South32, runs four collieries and three processing plants in eMalahleni (previously known as Witbank) and Middelburg.
Seriti Resources said on Monday that all of the hurdles had now been cleared to allow it to acquire the coal assets of South32 SA. The final hurdle was Eskom’s consent to a new coal supply agreement at its Duvha Power Station.
The deal was initially inked in November 2019, but some acquisitions take time. The sale is now expected to be completed on 1 June, with Seriti acquiring the majority stake in South32 SA Energy Coal Holdings (Pty) Ltd (SAEC).
“Eskom has agreed to amend the existing terms and conditions stipulated in the Duvha Coal Supply Agreement, which is currently loss-making, adjusting the coal price to R550 per ton with effect from 1 June 2021, with an annual escalation (from 1 January 2022) in line with the Producer Price Index. The agreement will run until 31 December 2024,” Seriti said in a statement.
Some big risks to investors have been hiding in plain sight
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For months, it’s been clear that snarled supply chains could hold back the post-pandemic recovery and trigger worrisome inflation. Now, that fear is once again coming to the fore, sparking a global sell-off in tech stocks that looks poised to continue on Tuesday.
What’s happening: Nasdaq Composite futures are down sharply in premarket trading. The tech-heavy index tumbled 2.6% on Monday. In Hong Kong, shares of tech giants Baidu and Alibaba dropped 3.5% on Tuesday, while delivery company Meituan’s stock plunged more than 5%.
While economists expect price increases to be temporary, investors remain concerned that rising costs could force central banks to hike interest rates sooner than expected, hurting the investment case for high-growth stocks.