- New agreement ensures coal supply to Matla Power Station until November 2043.
- Deal reinforces energy security but raises concerns over coal decommissioning plans.
- Eskom says the contract supports operational efficiency and regional economic stability.
Exxaro Resources and Eskom have signed a long term Coal Supply Agreement that will secure continued coal delivery from the Matla Mine to the Matla Power Station, extending a strategic partnership that has supported South Africa electricity generation for more than 40 years.
The new agreement, effective from 1 April 2026, will run until 30 November 2043, replacing the original 40 year contract signed in 1983. The deal ensures continuity of supply to the Matla Power Station and sustained operations at the associated mine.
However, the timeline of the agreement extends well beyond the planned decommissioning window for the Matla Power Station under South Africa Just Energy Transition framework. According to the Just Energy Transition implementation plan, the plant is currently scheduled for shutdown between 2030 and 2034. This divergence raises questions about the credibility and alignment of South Africa coal power plant decommissioning roadmap.
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Exxaro Chief Executive Officer Ben Magara said the agreement underscores the importance of coal in supporting national energy security, particularly amid fluctuating global conditions. He highlighted Eskom investment in the Matla Life of Mine expansion project as a key enabler for sustained supply.
Matla has seen a 15% improvement in its Energy Availability Factor over the last year, which may influence decisions on its remaining lifespan.
Eskom Group Chief Executive Dan Marokane said the agreement provides predictability and stability in coal supply for a critical generation asset. He added that the contract forms part of Eskom Cost Optimisation and Revenue Enhancement programme, aimed at improving procurement efficiencies and supporting the utility financial recovery.
The utility expects the agreement to deliver long term cost savings through improved operational performance and streamlined logistics, while also sustaining economic activity in Mpumalanga, where the Matla operation supports jobs, enterprise development and infrastructure investment.
The inclusion of strict coal quality specifications is expected to improve combustion efficiency at the power station, contributing to lower emissions intensity and supporting Eskom environmental objectives.
As South Africa accelerates renewable energy deployment and grid expansion, the agreement highlights the continued reliance on coal for baseload capacity. At the same time, the mismatch between the contract duration and the planned decommissioning schedule signals potential policy and planning tensions within the country energy transition pathway.
Author: Bryan Groenendaal
