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11 Dec 2012 10:59
Eskom has said it is hoping the country's competition authority will impose conditions on the merger to ensure coal supplies to its power plants are not at risk. (AFP)
Glencore was expected to defend its case this week after South African power utility Eskom raised concerns the deal could affect its coal supplies, but the hearing was postponed until January 18 after the parties asked for more time to prepare.
"We agreed to postpone the hearing because there would be insufficient time now to properly examine the matter," said Rafik Bhana, a lawyer representing Eskom, on Monday.
State-owned Eskom has said it is not calling for the deal to be abandoned but is hoping the country's competition authority will impose conditions on the tie-up to ensure coal supplies to its power plants are not at risk.
The utility relies on coal-fired power plants to generate 85% of the electricity that powers Africa's biggest economy and is keen to ensure the merger does not impede its ability to obtain timely, sufficient and competitively priced coal.
The meaning of the merger
Xstrata is one of South Africa's biggest coal producers and a key supplier of the fuel to Eskom. The utility said the merged entity would be supplying 15% of Eskom's coal and would be also among the largest traders in the coal market.
Eskom hopes to ensure that the merged entity does not dominate the market by setting prices that are unaffordable to the utility or opt for exports hoping for higher returns.
Insufficient and poor qualities of coal have been a concern to Eskom in the past and affected its ability to meet fast rising demand for electricity in the major producer of platinum, gold and other minerals.
Glencore's long-awaited takeover of Xstrata only has two hurdles left to clear: final approval from competition authorities in South Africa and China.
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