Mining contractor MCC, a division of Eqstra Holdings, has been selected as the preferred partner to conduct opencast mining operations for coal-focused Coal of Africa's 74% owned, Limpopo based, Vele Colliery.

This will help reduce its dependence on platinum-mining. Mining at an initial rate of one-million tons a year to 1,5 million tons of coking coal a year will start in the third quarter of this year and will ramp up to 5 million tons a year. The total estimated resource at the colliery is 721-million tons.

MCC CEO Mike Barnes reports diversification into coal mining is part of Eqstra's strategy to reduce the group's exposure to platinum.

"The company has a long history of platinum mining and has done extensive work on the western limb of the Bushveld Complex near Rustenberg, in the North West. In 2007 and about 85% of the company's turnover was generated in the platinum sector. The company was also very involved with Zimplats in Zimbabwe," says Barnes.

He adds that the significant knock that the platinum price has taken as a result of the global economic crisis has forced the company to reassess its operations.

"The company moved out of Zimbabwe at the end of 2008 upon termination of the contract with Zimbabwe Platinum Holdings. MCC also needed diversify to decrease its reliance on the platinum sector," says Barnes.

Barnes believes that the move into coal will be a good one for the company as this market will remain buoyant as long as South Africa relies on coal-fired power stations as its major source of energy.

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