Coal news and updates

Eskom secures more coal

Eskom is set to get a coal supply boost as Wescoal has inked a short-term supply deal to deliver 221 000 tons of fuel from its flagship Elandspruit project in Mpumalanga.

In a statement to shareholders, the listed miner says this follows on a short-term contracted inked in May to supply the power utility with 190 000 tons from its Khanyisa and Intibane mines.

Eskom supplies around 95 percent of SA’s power needs, but the economy has been plagued by rolling blackouts as the utility has battled to keep up with demand. Recently, the power entity celebrated 30 days that were loadshedding free.

Wescoal says inking the deal at Elandspruit “heralds an upturn in mining activity and revenues going forward after delays in finalising Eskom coal supply agreements”.

Elandspruit’s run of mine will be trucked 20km to the processing plant where it will be beneficiated to meet Eskom’s quality requirements.

Acting CEO Waheed Sulaiman notes “getting to this point is a major milestone and has been achieved through hard work and perseverance.

“Longer than expected delays earlier this year [in finalising the Eskom deal], resulted in us having to enter into sub-optimal coal sale arrangements with other customers while we engaged with Eskom.”

Sulaiman adds the company now aims to ink the long-term Eskom contract for Elandspruit, which is at the top of its priority list, after which it will focus on Intibane and Khanyisa.

“Wescoal has traditionally delivered stronger results in the first half of its financial year, but this year will see a reversal of that trend as we close out our current Eskom negotiations and continue to grow the business.”

At the end of July, the company announced it had delivered the “first coal” from its Elandspruit mine in Mpumalanga. The company bought the rights to the mine from Xstrata about three years ago for R94 million, noting at the time that the purchase of the open cast resource was in line with its goal of securing high quality resources.

Elandspruit has an existing mining right with a resource of 30.5 million tons. Adding the mine to Wescoal’s portfolio would aid it in meeting its target of 4 million tons a year.

The miner funded the Elandspruit development through a R200 million facility from Investec Bank. Elandspruit is expected to produce 200 000 tons a month by the end of this year.

source: http://www.iol.co.za