Ann: Maiden 44MT Coal Reserves at De Wittekrans C, page-15

re: Ann: Maiden 44MT Coal Reserves at De Witt... Hi Mike.

Am I right in saying Eskom pays about Aus $20/T?

It is lower grade than most export stuff, BUT when one considers that export stuff,when subtracting shipping costs, comes to around $110/T it does seem very cheap.

However, I dont know how the Sth Afr population would be able to pay higher prices given the % of the population below the poverty line.

Eskom wont be wanting to rock the political boat too much atm with Malema pushing his nationalisation policy. Another significant rise in power prices due to higher coal prices would be giving him more ammo.

The thing that might force Eskoms hand could be the Indian demand for lower grade coal, but again producers would be cognicent of the political issues.Dont know that these producers would be keen to waste rail allocation on lower earning Cv either if they have the export production avaliable.

Im wondering just how much Eskom/DMR uses the fact that quite a few mines produce both export and domestic grade coal to play one off against the other in terms of agreeing to new export production licenses required.I see we are still waiting on the DeWitt mining license.

I get the impression theres much political maneuvering to be done with these Eskom contracts.Wouldnt want to be attempting to get a long term contract through.

d.