Eskom’s Molefe ‘stonewalled’ Glencore SA, ex-CEO says

South Africa’s state-owned power utility was unwilling to renegotiate a coal-supply pact with a mine owned by Glencore’s local unit and sought to penalise it for supplying sub-standard fuel, resulting in the operation seeking bankruptcy protection, a former head of the business said.

The Optimum coal mine supplied Eskom’s Hendrina power plant and was placed under a local form of bankruptcy protection known as business rescue while owned by Glencore in August 2015. The operation was losing money because the power producer was paying a fixed price for the fuel, but the cost of mining it was rising more quickly than inflation, said Clinton Ephron, the former chief executive officer of Glencore’s local operation.

The only possible way to have saved the business would be to renegotiate the contract, he said. But when Ephron and Glencore CEO Ivan Glasenberg met then-Eskom CEO Brian Molefe about the contract, he said the electricity producer “was not willing to negotiate,” Ephron told a judicial panel probing corruption particularly during Jacob Zuma’s presidency. “It was a stonewall negotiation. It wasn’t a discussion, it was a position.”

Nedbank, South Africa’s fourth-largest bank, estimates that corruption, maladministration and bad policies shaved R470 billion ($33.9 billion) off the nation’s gross domestic product between the start of Zuma’s second term in May 2014 and February last year, when the ruling African National Congress forced him to step down to stem a loss of support. Zuma denies wrongdoing.