JOHANNESBURG (miningweekly.com) – Anglo American Inyosi Coal and Eskom “are broadly aligned” regarding Eskom’s empowerment imperatives for the New Largo project, Anglo American coal business in South Africa CEO and Anglo American Inyosi Coal chairperson Themba Mkhwanazi reported on Friday.

In a statement released by Eskom, Mkhwanazi said that the purpose of a recent memorandum of understanding (MoU) regarding the development of the opencast mine was to “establish a framework within which we can cooperate and achieve a mutually beneficial outcome”.

New Largo would be established to supply of coal to the 4 800 MW Kusile power station, which is currently being build in Mpumalanga.

The MoU was signed on November 21 in an effort to place the process of concluding a supply agreement back on track, following a breakdown that required a high-level intervention from both companies to salvage.

It is believed that Eskom’s 51% black-economic-empowerment (BEE) ownership stipulation for the project was central to the stalling of negotiations. Anglo American Inyosi Coal is a BEE company held by Anglo American (73%) and the Inyosi Consortium (27%).

Eskom said the MoU paved the way for the two companies to “negotiate and conclude the commercial and technical aspects of the project, while in parallel further engaging on the strategic empowerment imperatives and objectives to achieve the Public Finance Management Act conditions, which were part of the approval process from the Department of Public Enterprises”.

It is understood that the technical issues relate to the finalisation of the mine plan, which would inform the cost of the project and, in turn, the commercial terms of the eventual supply agreement.

“The MoU is about how we cooperate to progress the economy and the country to a bright future. Eskom and Anglo American are key pillars of the South African economy and we therefore cannot fail the country,” Eskom CEO Tshediso Matona said in the statement.

Earlier, Eskom executive for group capital Dan Marokane confirmed that the initial 800 MW Kusile Unit 1, which was scheduled for grid synchronisation by the end of 2015 or early 2016, would receive coal from third-party suppliers.

Contracts, he said, had already been concluded with suppliers, with the coal currently being delivered to other power stations within the Eskom fleet, while Kusile project work continued.

Marokane reported that teams were being "remobilised" in line with the MoU and that efforts would be made to “claw back” time that had been lost, while still ensuring that Eskom paid a fair price for the coal.