Mining Weekly

JOHANNESBURG (miningweekly.com) – Coal mining and trading company Wescoal, which sells 80% of its coal to Eskom, is comfortable with the price it receives from South Africa’s State-owned electricity utility.

“We think it’s a fair price, both to Wescoal and to Eskom. I understand Eskom’s challenges around managing costs and the costs that flow to the general South African public,” says Wescoal CEO Waheed Sulaiman, whose company has lifted its black ownership to 40%, from 30% last year.

“Our target is to be well over 50% black-owned,” Sulaiman disclosed in his video interview with Creamer Media’s Mining Weekly Online. (See attached).

The 200-employee concern, which has a market capitalisation of R300-million, posted a 76.1% surge in headline earnings a share to 27.1c each in the 12 months to March 31, when earnings a share rose 66.6% to 26.2c.

In the next five to eight years, the former BHP Billiton strategy and business development employee is planning to grow Wescoal’s run-of-mine production to eight-million tonnes of coal a year, from three-million tonnes currently.

In time, he intends earmarking one-million tonnes a year for seaborne exportation.

A source of encouragement to the rand-reporting export aspirant is the seeming bottoming out of export prices, which augurs well for the future.

Having successfully raised R52-million equity capital from shareholders last year, Wescoal is now taking steps to raise debt, which it expects to be able to leverage off long-term supply contracts.

The acquisitive company, with several assets and companies in its sights, intends to grow “aggressively” in the medium term.

On the organic growth front, its Elandspruit flagship mine is on the way to producing at a rate of two-million tonnes of coal a year, and its Intibane and Khanyisa collieries are together poised to chip in another one million-tonnes a year.

The company produced 2.8-million tonnes of coal in the 12 months to March 31.

Now fully operational, Elandspruit is already delivering on the initial R200-million invested in it, while Intibane is producing at a rate of 50 000 t a month and Khanyisa is awaiting standard regulatory approvals from the Department of Mineral Resources.

COAL TRADING

A big plus from the company’s coal trading division has been the considerable financial contribution it has been able to make towards the development of Elandspruit.

However, in the current tough domestic environment, the division’s challenge is to arrest margin creep by concentrating its efforts on customers with good credit ratings.

In the 12 months to March 31, Wescoal’s profit after tax jumped 78.8% to R51.8-million on a better-quality debtor book, increased productivity and cut costs.