JOHANNESBURG, Sept 4 (Reuters) - Glencore will provide financial support for its South African mining unit for a coal deal with power utility Eskom as the mine restarts supplying the commodity, the unit’s business rescue practitioners said on Friday.
The practitioners suspended the supply of coal to an Eskom power station in August while the unit undergoes a financial rescue program triggered by selling coal to the utility for less than the cost of production.
The practitioners “have secured financial support from Glencore” to be able to sell coal at about 150 rand per tonne, they said in a statement.
Glencore’s Optimum Coal Mine produces 10 million tonnes a year.
A spokeswoman for the business rescue practitioners said the temporary deal was still below the cost of production which is at least 400 rand per tonne.
“The recommencement of supply is intended to allow for meaningful negotiations to find a sustainable solution for all parties,” Piers Marsden, one of the business rescue practitioners said.
South Africa’s business rescue law, similar to Chapter 11 bankruptcy protection proceedings in the United States, allows a financially distressed company to temporarily delay creditors’ claims against it or its assets. (Reporting by Zandi Shabalala; Editing by James Macharia)