CoAL expects repair of Maputo line to help it get back on trackComment on this story
Coal of Africa Limited (CoAL) expects to resume coal exports through the Matola terminal in Maputo from next month, after damage to the railway line serving the Mozambican port cut off access in February.
“Transnet Freight Rail confirmed that the Matola railway line was reopened on April 19, and the company expects to re-commence the export of coal in May,” John Wallington, the outgoing chief executive, said yesterday in a production statement for the quarter to March.
CoAL declared force majeure, which removes liability for non-delivery resulting from natural catastrophes, at the Mooiplaats, Woestalleen and Vele collieries in February, after a bridge on the railway line to the Matola terminal in Maputo collapsed because of a train derailment and all rail traffic to the port was suspended.
“CoAL has implemented measures at these operations to mitigate the commercial and operational impact of the force majeure and is in the process of compiling a business interruption insurance claim,” Wallington said.
The derailment caused export sales from the Matola terminal to fall by 34 percent to 271 069 tons in the first quarter from 411 292 tons in the previous quarter.
Overall production at CoAL slumped 21 percent as a result of the derailment in Mozambique, combined with flooding in Limpopo, which halted production at the Vele coking and thermal coal colliery for three weeks.
Run of mine coal production in the quarter to March fell to 911 563 tons, from 1.15 million tons in the previous quarter.
JSE- and Australian-listed CoAL is a small coal producer that exports coal to Europe and Asia, and meets domestic demand from Eskom for low grade thermal coal. Between July last year and the end of March, CoAL has supplied 762 121 tons to Eskom.
CoAL is planning to restructure or sell its loss-making Woestalleen and Mooiplaats collieries. The Vele and Makhado collieries will remain in its portfolio.
A divestment of the coal assets meant CoAL would prevent an environmental and closure liability, Hunter Hillcoat at Investment Bank of Australia said yesterday.
“CoAL is hoping to divest its thermal coal assets, but the million dollar question is whether it will get anything” for them, he said. “They require a substantial injection of capital if they are to realise the value of their assets.”
Recently Beijing Haohua Energy Resource subscribed for $100 million (R910m) CoAL shares, through its subsidiary Haohua Energy International. But the business still requires additional funding and is consulting with financial institutions to secure short- and long-term debt facilities, according to the report.
The shares lost 4.19 percent to close at R1.60 yesterday.