Diversified mining group 
Xstrata reports that the greenfield Goed-gevonden coal mine project, in Mpumalanga province, as a first quartile cost producer, will have a significant positive impact on average operating costs for the South African division of its coal section, Xstrata Coal.

The company’s mid-2009 interim report indicates that Xstrata has experienced a consistent compound yearly growth of 11%, which has been supported by projects such as Goedgevonden.

The new mine falls under Xstrata Coal’s thermal coal 
operations, which experienced an 18% volume growth in the first half of the year.

The South African coal divi-
sion experienced an overall oper-
ating profit decrease from $188-million to $17-million in the first half of 2009, which, the company reports, is in line with significantly lower demand in the Atlantic and South African 
energy markets, resulting in lower volumes and associated real unit cost increases.

Xstrata reports that unit costs rose in South Africa as a result of temporary higher costs during the transition to opencut operations at Goedgevonden and the group’s Atcom East project, in Mpumalanga province, as well as industrial action.

Xstrata Coal announced in October that it had received board approval for the full 
implementation of the Atcom East project, at a capital commitment of about $407-million.

The new project will be integrated into the existing Xstrata Coal South Africa Atcom infrastructure and will produce about 5,7-million tons a year of run-of-mine production and 3,1-million tons a year of saleable thermal 
product for the domestic and 
export markets.

Despite Xstrata’s indications of lower demand in the Atlantic and South African energy markets, local demand for coal has been significantly buoyed by State-owned power utility Eskom, which is in the process of considerably increasing its power-generation capacity.

Half the coal mined at Goedgevonden is earmarked for export and a portion of the newly expanded capacity at the Richards Bay Coal Terminal has been secured to transport the coal to international markets.

Xstrata Coal CE Peter Frey-berg told Mining Weekly during a media visit to the company’s coal operations earlier this year that “coal is going to boom”.

Goedgevonden, in which Xstrata holds a 74% ownership stake, is one of four Xstrata Coal projects in execution phase. The Witbank-based mine has a yearly 
production capacity of about six-million tons and the project will ramp up to full production in 2010.

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