JOHANNESBURG (miningweekly.com)– ASX-, Aim- and JSE-listed Coal of Africa Limited (CoAL) on Monday announced the closure of its Mooiplaats Colliery, affecting 290 workers and 258 contractors.
The company said the care-and-maintenance decision followed sustained and concerted, but unsuccessful, attempts over the past two financial years to make the operation profitable and enable it to produce positive cash flows.
Mooiplaats – one of CoAL’s three operational collieries – recorded a loss of R167-million for the financial year ended June 30, 2012, and had generated an average monthly loss of R20-million since the beginning of the current financial year.
CoAL chairperson David Brown said the company’s efforts to improve productivity and establish profitable operations at Mooiplaats, which included capital investment, had been hampered by the global downturn in thermal coal prices in the last year.
“This situation has been exacerbated by the inability of the colliery to ramp up production to achieve required targets, owing to poor operational performance and challenging geological conditions,” he said in a statement.
The mining firm would now embark on a regulatory Section 189A process with stakeholders, which would involve a two-month consultation period to evaluate possible alternatives.
Brown said that, while the decision to cut jobs had not been taken lightly, the company needed to preserve its financial structure and ensure its future sustainability.
The company’s cash position on March 31 was $67.4-million.
Further, CoAL had an allocation of three-million tonnes in Maputo at the Matola Terminal, and was working to mitigate the take-or-pay exposure.
Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
EMAIL THIS ARTICLE