The Exxaro Grootegeluk brownfield expansion project is aimed at supplying State-owned power utility Eskom with 14.6-million tons of power-station- grade coal a year for its Medupi power station. The project is expected to produce first coal by May next year and is about 65% complete.

Exxaro Coal, a subsidiary of diversified miner Exxaro Resources, and Eskom signed the 40-year Medupi coal supply and offtake agreement on September 19, 2008.

The expansion at the Limpopo-based mine is expected to cost R9.5-billion, with R590-million allocated to the building of employees’ housing units. A total of R3.9-billion was spent up to the end of September, while R6-billion should be spent by May next year.

Mining will take place at the existing opencast pit, with the mine’s production expected to increase from 19-million sales tons a year to 34-million sales tons a year.

Eskom recently announced that it had initiated talks with Exxaro regarding its contractual coal-supply obligations, as a six-month delay to the start-up of Medupi’s first unit, or Unit 6, which is under construction near Lephalale, Limpopo, is expected.

As a result, the unit should now supply first power to the grid by May 2013 and not by the end of next year as originally forecast.

However, meeting the May deadline would depend on the ability of Japan- based boiler supplier Hitachi to achieve the remedial targets that had been set, said Eskom at its interim results presen- tation in November. This commitment has been secured from Hitachi Power Africa, its European unit and the Japanese holding company.

As a result of the delay, the first delivery of coal to Medupi, initially scheduled for the last quarter of this year, will take place in May 2012.

In late November, Mining Weekly reported that it is understood that Eskom could face material commercial risks should the delay become protracted, owing to the fact that it had reportedly concluded a take-or-pay coal-supply contract with Exxaro’s Grootegeluk mine.

When speaking at the group’s interim results presentation, Eskom CEO Brian Dames stressed that the delay was unlikely to undermine security of supply, owing mainly to the far-lower-than-expected growth in volumes of 0.9% for the interim period.

Demand growth was also expected to remain subdued in the second half of, as well as during, 2012, as a result of a slowdown in South Africa’s economic recovery.

Progress

Exxaro notes that, before first coal production, early coal, which is used for testing, will be ready for delivery from January.

The first shovels have arrived at the mine site and are being tested in the pit, while the first set of trucks arrived at the end of October and will be commissioned in early January. The second set of trucks will be delivered in May 2012.

Secondary equipment, such as the water trucks, has arrived and the construction of infrastructure for the semimobile tip and crusher is complete and erection is currently under way. The entire section should be finalised by February.

Further, the feed conveyors, the assizing building and the facilities for the Eskom silo are close to completion, with final touches being added. The run-of-mine bunker will only be completed by March 2012 and will start being used in April.

The load system, which is connected to the conveyors at the assizing plant, where coal is weighed and final testing is carried out, will be finalised this month.

The stockyard, both stackers and one bucket wheel reclaimer are being erected and both should be completed by the end of the year, with testing planned to start early next year.

All the orders for mechanical equipment have been placed and all free-issue items have arrived on site. A capital yard has been filled with equipment for the contractors to install to avoid any delays relating to the equipment.

There were some challenges, such as reinforcement shortages, which resulted in the construction companies having to import reinforcement. This occurred twice during construction; however, when the second shortage occurred, the contractors proactively stockpiled reinforcement in their on-site warehouses until they could import again, which had a lead time of eight weeks.

Mining Technology

The brownfield expansion requires new developments in mining processes, screening, beneficiation and the stock- yard. The project will make use of new technology to enable delivery of high-quality product. This will include semimobile crushers and tippers, dry screening of the material smaller than 6 mm, large-coal dense- medium separator [DMS] (larcodem) units and large cyclones.

The expansion will be mined with semimobile in-pit tip-and-crusher units supplied by the truck and loading operations. The tipping bins and crushers will be mobile units, used in the pit, and will move as the development progresses.

The coal beneficiation process will be handled through two new DMS faci- lities, the Grootegeluk 7 and 8 beneficiation plants, which will be constructed at the mine.

The run-of-mine (RoM) coal will be screened through the coarse coal screens to remove material smaller than 40 mm, while material smaller than 6 mm will be dry-screened to be directly mixed into the final product. There will be no need for slimes dams, as the plant will use dry screening for material smaller than 6 mm and mix it directly in the product.

Material bigger than 40 mm and smaller than 100 mm will be beneficiated in the larcodems, while material smaller than 40 mm will be beneficiated in the large cyclones.

The fines in the process water will be recovered in the thickener dams and dried in the filter presses to be mixed into the final product. Water that has come into contact with the coal will not be allowed into the environment. Polluted water will be kept in the loop circulation process to be reused.

The stockyard will accommodate about 430 000 t of coal, which will be stacked with two stackers and reclaimed with one reclaimer. The RoM stockpiles will be intro- duced between the mine, the plant and discard stackers to support continuous production.

About 794 housing units are also being built to cater for the project team and the expanded workforce thereafter.

In October, conveyor equipment supplier Melco reported that it was nearing the end of the contract to supply conveyor equipment to the project.

The Grootegeluk mine is being supplied with conveyor idlers for the construction of a conveyor system that will link the mine to the Medupi power station.

When the system has been completed, the coal will be transported from the mine to the Medupi power station.

In February, Exxaro reported that detailed project design for the expansion project was nearing completion.

About 90% of the major construction packages and the plant equipment pack- ages had already been placed, with the balance to be placed during the first quarter of 2011.

On-site construction had started by February, with most of the bulk earthworks nearing completion. Civil work was under way, with major structural work having started that month.

The first drawdown on the loan facility for the project was only expected in the second quarter of 2011.