Eskom consumes approximately 100 million tonnes of coal per year, making it one of the world's largest coal consumers. Historically, Eskom had long-term cost-plus contracts with major mining companies that provided reliable supply at predictable prices. From the mid-2000s, the ANC's BEE policies in mining, combined with cadre deployment at Eskom, created opportunities for politically connected suppliers to capture coal procurement.
The "coal mafia" operated through several mechanisms. Short-term and medium-term coal supply contracts were awarded through procurement processes controlled by Eskom officials who received kickbacks. Coal quality was compromised — suppliers delivered coal with lower calorific values than specified, meaning Eskom had to burn more coal to generate the same electricity, increasing costs and emissions. Trucking cartels controlled coal transport, charging inflated rates.
The Tegeta/Gupta connection was the most politically explosive dimension. Tegeta Exploration & Resources acquired the Optimum Coal Mine in 2015 in a transaction facilitated by Eskom — which applied a R2.17 billion penalty against the previous owners (Glencore), making the mine available at a distressed price. The Zondo Commission documented this extensively.
Beyond the Guptas, the broader corruption network included provincial politicians who owned coal mines supplying Eskom, trucking companies owned by ANC members, Eskom officials who received bribes for approving substandard deliveries, and mines operating without proper environmental licences.
Eskom's coal costs escalated from approximately R20 billion per year in 2008 to over R50 billion by 2020, with a significant portion attributable to corruption rather than market forces. Communities in the Mpumalanga Highveld experienced some of the worst air quality in the world, contributing to respiratory disease and premature deaths.