Johannesburg - The Western Australia-based Waterberg Coal Company (WCC), which recently appointed former ANC treasurer-general Mathews Phosa as a non-executive director, believes it is in a position to fill Eskom’s coal supply gap for the next century.
It also claims it has enough potential coal supplies to stop blackouts and expects to provide all the coal needs for the Majuba coal-fired plant in Mpumalanga from the third quarter of 2015 from a massive reserve of thermal coal near Lephalale in Limpopo.
Perth-based Stephen Miller, the executive director, who was in Cape Town to meet shareholders in the joint venture with black empowerment partner Sekoko Resources led by Tim Tebeila – who is a non-executive chairman of Firestone Energy – said the resource of the mine near Lephalale in Limpopo was big enough to supply the state-owned power company for 100 years.
In the initial phase it was on track to provide 10 million tons a year rising to 20 million tons. This, Miller believed, would close the supply gap that Eskom faced as older supplies dwindled.
Questions put to Eskom were not answered, but WCC has signed a memorandum of understanding with the state-owned power monopoly. The coal supply price was expected to be lower than “the import parity price”, said Miller.
Jeremy Woods, the chief executive of Growth Equities, said the expected resource had after investigation nearly doubled. It was now as sizeable as neighbouring Grootegeluk coal mine, run by Exxaro, which will supply Medupi. The Exxaro mine had been running for about 25 years but were originally of similar size. The WCC mine’s resource is estimated to be in the region of 5 billion tons of coal.
Miller’s background is in “putting mines together” and he was pleased to announce that Standard Bank had helped finance the project, which is 70 percent WCC owned. He helped put together the Tasiast gold mine in Mauritania and the Mbalam-Nabeba iron ore project in Cameroon.
Miller said his company had injected $100 million (R1 billion) into the exploration phases, the environmental impact assessment and other start-up costs. “The first soil will be turned in April next year… we expect to be running from September 2015.”
Woods, who advises WCC, said: “All talk of blackouts will be over.”
On October 1, WCC listed on the JSE’s AltX board. Mining Weekly reported that it was listed on the Australian Stock Exchange. The Limpopo project was made up of eight coal tenements of nearly 8 000ha. Miller said these had previously been hunting farms “and other small farms”.
Through WCC’s wholly owned subsidiary, Ariona Company South Africa, it acquired 25 percent of Sekoko Coal, which holds a 40 percent stake in the Waterberg project, giving WCC a 10 percent interest in the project, according to Mining Weekly. The other 60 percent is held by Firestone Energy, in which WCC holds 42.07 percent.
Miller, who announced the appointment of Phosa on October 28, said he would “guide us on the right paths”. His appointment reflected the “evolving nature of the Waterberg Coal Company as a truly South African company to develop… a world class asset”.
Director of groundWork Bobby Peek said he was concerned “the type of economic wealth generated here will be for the benefit of the political and corporate elite… for people in the game and in the know”.
He said the area was water stressed. Eskom announced it would delay installation of desulfurisation equipment at Medupi, which extracts dangerous sulphur dioxide emissions using millions of litres of water. It also asked for a compliance delay until 2027, 10 years after Medupi is expected to be running. A condition of a $3.7bn World Bank loan to Eskom in 2010 was the installation of flue gas desulfurisation equipment.
Some farmers in the WCC area had refused to sell their properties, meaning they could be marooned between open-cast mines, Peek said. - Business Report