JOHANNESBURG (miningweekly.com) – ASX-, Aim- and JSE-listed Coal of Africa (CoAL) on Monday reported that it was expected to be awarded mining rights for several of its South African projects by the end of this year, and that its Vele project would start production in early 2010.

The Vele coking coal project, in the Limpopo province, was expected to be granted a mining right before the end of this year, with production to follow within four months of receiving the required legislative approval.

The company initially expected the approval of a mining right before the end of September.

The first phase of the Vele project would produce one-million tons a year, and could be doubled if ArcelorMittal South Africa increased its off-take. Output would be boosted to five-million tons a year in the second phase.

CoAL, which lifted its interest in Vele to 80% on Friday, said it would  take full ownership of the project, once the new order mining right was granted.

The mining right for CoAL’s 100%-owned Holfontein coal project, was expected to be granted by the end of 2009.

Further, the application to extend the current mining right of the Mooiplaats project, in Mpumalanga, to include the Klipbank and Adrainople farms had been lodged with the Department of Mineral Resources (DMR), and approval of this application was expected by the end of 2009.

Trucking of coal from Mooiplaats was started in September, and trains would continue to be loaded and dispatched to use the maximum stockpile of 80 000 t at the Matola terminal in Mozambique.

Coal shipping would start by the end of 2009.

CoAL is in discussions with South Africa’s Transnet Freight Rail regarding a public-private partnership on the Maputo rail corridor to ensure that the availability of rail capacity match the Matola port capacity secured through an agreement with freight and shipping logistics company Grindrod.

Meanwhile, CoAL announced that it had terminated a Richards Bay throughput agreement with Grindrod, under which a long-term port allocation would have been secured for the export of coal produced at Mooiplaats, through the dry bulk terminal at the South African port.

The agreement was terminated as a result of certain conditions precedent under the agreement, not being met by Grindrod, the mining company stated.

The throughput agreement provided CoAL with an allocation of 900 000 t/y of coal with the potential to increase its export capacity to three-million tons a year once the terminal expansion has been completed.

However, CoAL said it continued to work with Grindrod and others to secure allocation at the Richards Bay terminal, and that it would use the Motola terminal to export the coal produced at Mooiplaats.

The company also said that it had signed an off-take agreement with mineral marketer Traxys for 35% of the export quality thermal coal from Mooiplaats.

“The terms of this agreement offered significant upside over what were considered standard terms in the industry,” CoAL said in its statement.

CoAL had agreed terms with another global trader for a further 35% of the Mooiplaats project export quality thermal coal and said it would execute a formal off-take agreement by the end of 2009.                                                                          

Meanwhile, CoAL had prepared the documentation required for the mining right application for the Makhado project, based on the planned five-million tons a year production profile of the 1,3-billion tons coking coal project.

The application would be submitted once Section 11 approval in terms of the South African Minerals and Petroleum Resources Development Act, had been granted by the government for the Rio Tinto Farm Swap.

In July, the company submitted an application to DMR for the extraction of a bulk sample from the Makhado project. Approval of the application was expected in the fourth quarter of 2009 and the sample extracted would yield 1 000 t of coal for analysis by ArcelorMittal SA in its coking ovens.

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