MC Mining CEO David Brown
Photo by: Dylan Slater
Coal exploration, development and mining company MC Mining has signed the first coal offtake agreement for hard coking coal (HCC) to be produced at its Makhado hard coking and thermal coal project, in Limpopo.
The agreement was entered into between MC Mining subsidiary Baobab Mining & Exploration – the owner of the Makhado project – and Chinese State-owned enterprise Huadong CoalTrading Centre (HDCTC), as well as the China Forestry Group.
The three-year offtake agreement will include the supply of a minimum of 400 000 t/y of HCC to HDCTC.
The Makhado project is expected to produce up to 800 000 t/y of HCC, as well as between 900 000 t and one-million tonnes of export-quality thermal coal a year.
The agreement confirms the quality of the Makhado HCC and international demand for the product, MC said in a statement on Monday, noting that this also represents another significant step in the development of the Makhado project, which will generate significant employment opportunities in Limpopo.
Under the terms of the agreement, supply of HCC to HDCTC is due to start 18 months after construction of the Makhado project begins, with site works expected to start by June 30, 2020.
Baobab will, in the interim, confirm by April 1, 2019, that it has secured funding for the capital, mining and operations for its Makhado project.
HDCTC and the company also need to procure the necessary internal and regulatory approvals to proceed with the agreement, also by April 1, next year.
The development of MC Mining’s flagship Makhado project is expected to facilitate economic growth in the Limpopo province, and the agreement has the potential to generate significant foreign currency inflows for South Africa, the company said on Monday.
“The signing of the first HCC offtake agreement is a significant step for Makhado, reaffirming its world-class coal qualities and international appetite for this type of coking coal,” CEO David Brown commented.
He stated that South Africa is a traditional producer of thermal coal with currently no significant HCC being produced, which results in producers having to import the commodity.
“Makhado’s coking coal has the necessary attributes to replace some of these imports while the development of the project will generate employment opportunities in the Limpopo province and make a positive contribution to the national balance of payments.”
MC Mining is continuing with negotiations with other potential domestic customers for the balance of the Makhado HCC production, which Brown said would position MC Mining as South Africa’s pre-eminent producer of high-grade metallurgical coal.