JOHANNESBURG (miningweekly.com) – The board of Aim-listed Strategic Natural Resources on Wednesday said its 74%-owned subsidiary Elitheni Coal has signed a coal supply agreement with a bioethanol project in the Eastern Cape, initiated by the Eastern Cape government.

The agreement entails a total of 70 000 t/y of washed coal from the Elitheni mine to be supplied to a bioethanol plant, which is to be built in the Eastern Cape. The project will be producing its own power, fuelled by Elitheni’s coal.

Development finance institution Industrial Development Corporation (IDC) is funding the project, which was set up to promote economic growth and industrial development, and is owned by the South African government under the supervision of the Economic Development Department.

“The coal supply agreement has an initial term of 20 years, with an option to renew, resulting in an initial total supply of 1.4-million ton to the project. The coal has been priced on a fixed basis with yearly inflationary increases linked to South Africa’s producer price index,” the company said in statement.

Coal supply is expected to start in 2013, subject to the project’s operational status. The bioethanol plant will use a fluidised-bed combustion process, designed specifically for coal from the Eastern Cape coalfield.

“We are delighted to be a part of this IDC-funded project. Supplying our coal to local industry is a strategy we as a company have considered to be viable for a long time and it is encouraging to see our endeavours come to fruition after a great deal of interaction with the IDC.

“Although Elitheni will primarily be an export mine, given its significant reserves, the company will continue to work with local industry with the aim of supplying coal for use in industrial steam and power production,” SNR and Elitheni CEO David Nel said.
 

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.