Anglo should work with Eskom on coal asset sales

April 21, 2016 8:01 AM

Anglo, which reported lower first-quarter production figures on Thursday, is trying to sell off businesses, including in coal, to cope with a collapse in commodity prices.

The logo of state power utility Eskom is seen outside Cape Town's Koeberg nuclear power plant in this picture taken March 20, 2016.

Anglo American should work with Eskom on its plans to sell local coal assets because the South African power utility owns part of the mines, a senior Eskom executive said on Thursday.

Since the 1970s, Eskom has had contracts with coal miners, under which it paid for the miners' running costs in exchange for guaranteed coal supplies at a pre-determined prices.

"Eskom technically owns part of, if not the majority of, operating assets and mining infrastructure, while Anglo owns the mining rights and some of the surface rights," Matshela Koko, head of generation at Eskom, said in an opinion piece published in the Business Report newspaper.

Eskom, which supplies virtually all of South African electricity, relies on coal for nearly 90 percent of its power generation.