While the South African coal mining industry remains steady, primarily owing to strong domestic demand from State-owned power utility Eskom, the Mozambique coal industry is “reeling” from decreased global coal prices, says multinational Indian mining, steel and power conglomerate Jindal Steel & Power subsidiary Jindal Africa.

“With global contraction in the demand for coking coal, steelmakers have resorted to Australian coking coal, which still has a much better quality than Mozambique coal,” Jindal Africa CEO Ashish Kumar tells Mining Weekly.

He adds that, as logistics remains a significant challenge, owing to underdeveloped rail and port infrastructure in Mozambique, producers are spending significantly more on transporting and exporting coal, compared with the costs they would have incurred in South Africa or Australia. Mozambique’s coal operations are, therefore, struggling in the current depressed markets.

Jindal Steel & Power is, therefore, adopting “a wait and watch approach” to the expansion of its Chirodzi coal mine, in Mozam-bique’s Tete province.

The company aims to stabilise the existing mining operation by recovering coking coal from the filter cake with the addition of a froth flotation circuit. It also plans to explore local markets for opportunities to sell its thermal coal and is implementing several initiatives to improve operational efficiency.

“Jindal Africa is also discussing the possibility of establishing a power plant that will use the lower-grade coal being produced at Chirodzi,” says Kumar.

In April, Jindal received environmental-impact-assessment approvals for the construction of a 350 MW power plant in the country.

“The coal price necessitates our focusing on being cost efficient to ensure the viability of operations, and our securing the necessary allocation of existing infrastructure to accommodate the transport of product This involves obtaining support from Mozambique parastatals to reduce transport costs,” he emphasises.

Jindal is also investing substantially in logistics solutions to help improve transport of the commodity. It commissioned the project’s railway infrastructure, which includes Jindal’s locomotives and wagons, a 220 KV/ 33 KV substation, as well as a 22 km water pipeline, in the 2013/14 financial year.

Nevertheless, Kumar believes that an increase in the coal price is on the horizon. “That would reposition Southern Africa as a major hub of the global coal market,” he says.

Sustainable Production
Kumar tells Mining Weekly that the company is also focusing on maintaining production levels at its Kiepersol colliery, near Piet Retief, in Mpumalanga. The colliery has a production capacity of 1.4-million tonnes a year.

In March, Jindal Mining South Africa (SA) took over the operation and maintenance of the coal wash plant, as it would not only lead to a more reliable plant operation but also drive further cost efficiencies.

Jindal Mining SA has also taken over the mining of two adits, with a contractor mining in another.

“We have also opened up a new adit, where the contractor started mining this month. “This should increase production levels to 100 000 t/m from next month,” says Kumar.

He adds that equipment has been ordered to open up a fifth adit in March 2015. This will result in the company producing enough coal to take advantage of the wash plant’s full capacity.

“We are focusing on stabilising production,” Kumar notes, emphasising that Jindal aims to do more than 50% of its mining in-house, which will go a long way towards achieving that.

Last year, in its fifth year of operation, the colliery faced several issues and, as a result, only produced about 900 000 t of coal.

“Although the steep drop in the global coal price impacted negatively on the mine’s profitability, our customer base continued to increase and more avenues for export were also established,” says Kumar.

Sales from the colliery for last year totalled about 600 000 t of washed coal, of which 45% was supplied to the domestic market, while the rest was exported.

Kumar notes that demand for anthracite, mainly from ferroalloy producers, continues to remain strong. “The export markets have shown more potential lately, as political tension in Russia and Ukraine have blocked off much of the anthracite supply from that region,” he says.

However, supply has not remained as strong as demand, as some local miners face operational issues. They are struggling to maintain consistent production levels, while new projects are also missing their timelines, largely owing to a lack of funds, concludes Kumar.