CoAL still hopeful it will be able to start operations at local mining sites

Date: 06 May 2017 By: Isabel Venter

Mining company Coal of Africa Limited (CoAL) is serious about making the shift from being an exploration company to becoming a coal producer.

CoAL has been struggling since 2013 to get back in the game after floods caused major damage to their Vele Colliery. This week the company outlined what they called "a quarter of overdue good news", after they sold an asset, raised capital, reduced cash outflows and acquired a mine that will give them their first production in years. "The company is making good progress towards re-entering the market as a coal producer, while focusing on the timeous funding and finalisation of the regulatory and surface right requirements for the Makhado project," said CoAL’s CEO David Brown in the company report for the first quarter of 2017.

Brown gave a long list of the positive developments at CoAL, in contrast to the company's struggle to bring its Vele coking coal mine in Limpopo into production and to start construction of their Makhado Colliery in the face of opposition.

These positive developments include CoAL's recent agreement with Pan African Resources to buy their Uitkomst colliery in KwaZulu-Natal for R275 million. Brown hopes that CoAL will be able to pay, in part, for the new mine through income derived from production.

Insofar as it concerns the Makhado Colliery, the Industrial Development Corporation has agreed to give CoAL a R240 million loan in exchange for a 15% holding in Baobab Mining and Exploration, a CoAL subsidiary company that owns the Makhado project.

The company is developing the flagship Makhado project, which will produce hard coking and thermal coal through open-cast mining. Currently, the Makhado project is still delayed as the integrated water-use licence for the project had been suspended, following an appeal that was made by the anti-mining group, Vhembe Mineral Resources Forum (VMRF).  The interim court interdict that was granted in 2014 has brought mining and further construction activity to a complete halt. Brown is, however, positive that the Department of Mineral Resources will come to a favourable decision once they have reviewed the matter and will lift the suspension “soon.”

In addition, CoAL is also battling to secure the surface rights for Makhado, which is spread over five farms, all with registered land claims. The company has previously said that it intended to commence construction in calendar year 2018, subject to board approval.

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Isabel Venter

Isabel joined the Zoutpansberger and Limpopo Mirror in 2009 as a reporter. She holds a BA Degree in Communication Sciences from the University of South Africa. Her beat is mainly crime and court reporting.

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