JOHANNESBURG - MC Mining on Monday concluded its first coal purchase agreement with Huadong Coal Trading Center (HDCTC ), a Chinese state-owned enterprise, for hard coking coal to be produced by the Makhado hard coking and thermal coal project in Limpopo province.
The purchasing group is the owner of the Zhonglin Rugao, Zhonglin Xinminzhou and Zhonglin Suqian ports as well as Yangtze River water and harbour space and canal shoreline, together with 780,000 tonnes of berth-space.
MC Mining said that the three-year off-take will result in the supply of a minimum of 400,000 tonnes of hard coking coal per annum to HDCTC, which amounts to half of Makhado's annual hard coking coal production as the Makhado Project is expected to produce up to 800,000 tonnes of hard coking coal.
The Makhado project is MC Mining's most advanced feasibility-stage project with 344.8 million mineable tonnes of coal in situ. The resource will initially be mined on an opencast basis over 16 years with the potential for further expansion underground.
It is envisaged that the coal will be sold free-on-board (FOB) at the Matola Terminal in Maputo, Mozambique. The HCC sales price per the agreement is linked to a published index price, confirming the marketability of Makhado’s coal.
International prices of HCC have been positive over the last 18 months and the Company is confident that long-term prices will remain favourable.
The agreement was brokered by Apex Commodity Markets Limited, a boutique physical commodity brokerage headquartered in London and with representation in China, South Africa, Austria, Canada and the United States.
Apex will charge a market related commission for coal sold in terms of the agreement, facilitating the sales as well as communications between MC Mining and HDCTC.
David Brown, MC Mining chief executive, said the signing of the first hard coking coal off-take agreement was a significant step for Makhado.
"South Africa is a traditional producer of thermal coal with currently no significant hard coking coal being produced which results in producers having to import the commodity," Brown said.
"Makhado’s coking coal has the necessary attributes to replace some of these imports whilst the development of the project will generate employment opportunities in the Limpopo province and make a positive contribution to the national balance of payments."
Brown also said that the miner was progressing negotiations with other potential domestic customers for the balance of the Makhado hard coking coal, positioning MC Mining as South Africa's pre-eminent producer of high-grade metallurgical coal.
- African News Agency (ANA)