Exxaro Resources CEO Ben Magara and Eskom CEO Dan Marokane. The deal builds on a relationship that dates back more than 40 years, when the first coal supply agreement between the two entities came into effect in July 1983.
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Eskom and Exxaro Resources have strengthened their decades-long partnership with the signing of a new long-term Coal Supply Agreement (CSA), ensuring continued coal supply to the Matla Power Station and reinforcing the stability of South Africa’s electricity system.
The agreement, signed on 1 April 2026, secures coal supply from Exxaro’s Matla Mine to Eskom’s Matla Power Station until 30 November 2043, with provisions for extension or early termination by mutual consent.
The deal builds on a relationship that dates back more than 40 years, when the first coal supply agreement between the two entities came into effect in July 1983.
Eskom said that at its core, the renewed CSA is designed to provide predictability and long-term stability in coal supply, a critical factor as South Africa continues to grapple with energy security challenges and works to stabilise its national grid. For Eskom, the agreement represents a key component of its ongoing recovery strategy.
Group CEO Dan Marokane emphasised that securing a reliable coal supply is essential for maintaining consistent baseload generation, particularly as the utility balances legacy coal operations with a gradual shift toward renewable energy.
“This agreement ensures predictability and stability in the supply of coal to the Matla Power Station, an essential component of our generation fleet, and reinforces a partnership that has supported the nation’s power system for more than four decades,” Marokane said.
“Crucially, this new contract structure is a key deliverable of Eskom’s Cost Optimisation and Revenue Enhancement (CORE) programme, which aims to drive efficiencies in primary energy procurement.”
Through streamlined logistics and improved operational performance, Eskom expects the agreement to deliver meaningful long-term cost savings, supporting both its financial recovery and operational sustainability.
Beyond its energy implications, the deal carries significant socio-economic benefits, particularly for the Mpumalanga region where the Matla operations are located. The continued operation of the mine is expected to safeguard jobs, support local businesses, and sustain economic activity in surrounding communities.
Matla Mine has long served as an economic anchor in the region, contributing to employment, enterprise development, and infrastructure investment. The new agreement provides the certainty needed to sustain these contributions while enabling ongoing investment in safety, operational efficiency, and environmental management.
Exxaro CEO Ben Magara described the agreement as a significant milestone that underscores the strategic importance of the Matla operation within the company’s broader coal portfolio.
He highlighted that the deal follows Eskom’s recent investment in the Matla Life of Mine (MLOM) expansion project, which is expected to enhance the mine’s ability to sustainably supply coal for the remainder of its operational life.
“Exxaro is confident in the future of the operation and confirms the strategic importance of Matla as a key operation within our coal portfolio, representing our commitment to responsible resource development, and our continued focus on delivering reliable energy solutions that support the country’s economic growth, while creating lasting value for our employees, host communities and the broader economy,” said Magara.
A notable feature of the CSA is its emphasis on coal quality specifications, which are designed to improve combustion efficiency at the Matla Power Station. Higher efficiency not only enhances power generation performance but also contributes to reducing the plant’s carbon footprint, aligning with Eskom’s broader commitment to lowering emissions over time.
The agreement comes at a pivotal moment for South Africa’s energy sector. While renewable energy is expected to play an increasingly prominent role, coal remains a cornerstone of the country’s baseload capacity. Ensuring a stable and reliable coal supply is therefore essential to maintaining grid stability as new energy sources are integrated.
As Eskom works to decongest the grid and enable faster renewable energy uptake, agreements such as this provide the operational consistency needed to support both current demand and future transition goals.
For Exxaro, the deal also reinforces its strategic positioning as a diversified natural resources company with ambitions beyond coal, including investments in energy solutions and transition metals.
As the company marks its 20th anniversary, it continues to emphasise its Sustainable Growth and Impact strategy, balancing economic performance with environmental and social responsibility.
BUSINESS REPORT