Coal news and updates

HCI Coal disappoints, but ‘makes progress’

Despite a scrappy performance by its coal ventures, investment conglomerate Hosken Consolidated Investments (HCI) holds high hopes for its fledgling mining operations.

HCI Coal ended March with a 17% hike in revenue to R653m whittled down to R65m in pre-tax profits, almost unchanged from the previous financial year.

At the interim stage to end-September its performance looked promising, with revenue of R321m translating into profit before tax of R55m.

HCI Coal has three interests: Palesa Colliery, an operational mine near Bronkhorstspruit with a supply agreement with Eskom running to 2018; Mbali Colliery; and Nokuhle Colliery. Mbali and Nokuhle are in development and will produce export-quality coal.

HCI Coal makes up less than 5% of HCI’s profit before tax, but is regarded as one of its biggest growth areas and a potential sweet spot for corporate action. HCI is investigating more coal deposits in South Africa and neighbouring countries. HCI CEO Johnny Copelyn said the mining operations’ perfor mances were disappointing. "While we had hoped to open a second mine, Mbali, early in the year, the commissioning of the mine proved exceptionally difficult." He said flooding of mines in March and a service delivery protest (unrelated to the mine) disrupted production.

"One should probably admit that when one is down to blaming the weather and social problems it must have been a very bad year…." Mr Copelyn said HCI Coal had a great year in relation to long-term value creation. "We secured our mining rights at Mbali and at Rooipoort. We have reason to believe we are making steady progress in obtaining our mining rights at Nokuhle."

He said HCI Coal had since secured another Eskom supply contract and an off-take agreement for export quality coal. He said the coal assets were increasing in value, and said the unchanged bottom-line results of the past year was unlikely to be repeated in the new year.

Source: www.bdlive.co.za/business/mining