Exxaro gives nod to R3.8bn new coal mine

Time of article published Jun 27, 2014

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Exxaro Resources had approved a new R3.8 billion mine that would produce coal for export and supply one of Eskom’s plants in the power station belt, the company said yesterday. The Belfast project in the coal-rich Mpumalanga province “encompasses one of the last high-quality reserves” in the region and “presents Exxaro with an opportunity for excellent returns”, the Pretoria-based company said in a statement. The mine’s estimated production was an average of 2.2 million tons of A-grade export coal a year and 500 000 tons of the fuel that would be burned for power by state-owned power utility Eskom, it said. The mine was forecast to start output in the second half of 2017, the company added, noting that about R3.6bn of the approved spending would only take place once Exxaro got the necessary licences and regulatory approvals. Exxaro, which manages seven South African coal mines producing about 40 million tons a year, currently delivers all the power station coal that it produces to Eskom, which relies on the fuel for 85 percent of generation and is struggling to meet demand in the continent’s second-biggest economy. The first phase of its Thabametsi mine, next to its existing Grootegeluk operation in the Waterberg area of Limpopo, would coincide with the development of a 600 megawatt power plant being developed by France’s GDF Suez. A bankable feasibility study for Thabametsi North Phase 1 would start in the third quarter and should be completed by the middle of next year, it said. The project was first announced last year. Coal dispatches to Medupi power station commenced on June 23, the company said. Exxaro might write off as much as R5.36bn in its Mayoko iron ore project in the Republic of Congo after it failed to conclude port and rail agreements, the company added. – Bloomberg

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