JOHANNESBURG – Junior trading and coal miner Wescoal has entered a new era under incoming chief executive Reginald Demana, who is leading a strategy to strengthen the group’s prospects in the medium- to long-term further.
Demana said that Wescoal, which recently acquired the Arnot mine from Exxaro Resources, planned to breathe new life into Arnot.
“We feel we are well placed to reopen the Arnot mine and supply coal to the Arnot power station,” Demana said.
“To that extent Eskom itself issued a request for proposals to supply coal to the Arnot power station, which closed today.”
Arnot supplies Eskom with 8 million tons a year, before Exxaro closed it in 2015, following failed efforts to negotiate a new coal supply agreement with the utility.
At the time Eskom wanted to pursue a strategy of not reinvesting in cost plus mines.
Demana said a Wescoal team was working on the tender.
“We have a team that worked throughout the night finalising the proposal,” he said. “We see it as a great opportunity. We have the potential to supply the Arnot power station using conveyor belts which we think will be advantageous for Eskom from a price point of view.”
Demana said Eskom was Wescoal’s biggest customer. He said it remained a very reliable customer and pays on time while being accommodating.
Demana, 45, who replaced Waheed Sulaiman, began his term as chief executive on Monday after previously being Wescoal’s lead corporate adviser.
The former Nedbank banker led Wescoal’s acquisition of Keaton Energy as well as the implementation of the company’s black economic empowerment transaction, which boosted its balance sheet.
Wescoal is a producer whose portfolio includes the Khanyisa colliery, Elandspruit and Vanggatfontein, a mine it acquired from Keaton.
Over the past five years Wescoal went on a major restructuring trail to beef up its portfolio.
Wescoal sold its Intibane and Brakfontein Collieries as well as some of its anthracite assets in the past year-and-a-half in a bid to raise cash.
Wescoal also moved to gain a 100 percent control of Khanyisa colliery meaning it was now wholly responsible for mining and sales over the mine’s remaining four year life.
Demana said Wescoal was transitioning to a new mining contractor at the Vanggatfontein mine to boost operational stability.
“We are now entering (what you may call) a new phase, with a new strategy. Our strategy will effectively ensure firstly we have operational stability and extract efficiencies from our operating mines.
“Secondly, we want to grow and sustain the business looking at internal projects. Thirdly we need to look at making value enhancing acquisitions,” Demana said.
Wescoal shares closed unchanged on the JSE on Tuesday at R1.50.