Owing to Covid-19-related industry shutdowns and low demand for coal and anthracite, the operations of South African anthracite producer Zululand Anthracite Colliery (ZAC) – a subsidiary of mining investment firm Menar – were placed on care and maintenance. However, operations reopened on January 4 and production has resumed.

“The main factors that prompted operations to resume were the return of customer demand and improved anthracite prices. Another factor was that the mine could not afford to remain on care and maintenance any longer, as it is a relatively costly process that generates no revenue, and care-and-maintenance operations would not have been sustainable for much longer,” says Menar KwaZulu-Natal operations COO Bradley Hammond.

During the onset of the pandemic, ZAC strictly adhered to Covid-19 health and safety protocols but, as Hammond explains, operating at 50% capacity in an underground mine is challenging because the mine still requires 100% of services (and their associated costs)to continue operations in all shafts and the main complex.

This challenge, coupled with industry lockdowns, and the subsequent dips in demand and coal prices, prompted ZAC to be put on care and maintenance in March 2020.

“Throughout the care-and-maintenance period, there was a core team that maintained the mine assets such as equipment and infrastructure. During this period, several projects continued, with ZAC making improvements to operations to ensure that there would be systems in place to effectively manage Covid-19 protocols, as well as to mine more cost competitively to accommodate the low anthracite demand and prices,” Hammond affirms.

The team ensured that ZAC is now in a position to ramp up to full production over the next few months and “all returning employees had to undergo Covid-19 screening and pass medical fitness assessments to resume work”.

Since operations restarted, the mine has been recalling workers in a phased approach. Hammond notes that, when the market for ZAC products collapsed and the mine was put on care and maintenance, a Section 189 process was conducted to enable the mine to fulfil its legal obligations to workers. The mine also signed a recall agreement with labour unions to give retrenched workers first right of refusal.

Further, while there was no need to apply for a mining licence to resume operations, ZAC notified the Department of Mineral Resources and Energy (DMRE) of the downscale in operations, in terms of the Mineral and Petroleum Resources Development Act (MPRDA) and, once operations resumed, notified the DMRE again in accordance with the MPRDA.

Hammond tells Mining Weekly that the current coal price enables ZAC to be feasible for the medium to long term.

“The current price is sustainable for ZAC’s operations. With restructuring, improvement projects, and at current coal and anthracite prices, the mine will be profitable. However, markets can fluctuate, which is why we continue to operate in a financially prudent manner and keep costs down wherever possible. Profits can be made as long as production targets are met, but for now, it will be a little more than breaking-even at most.”

However, prices should improve as the pandemic recedes and vaccination programmes are rolled out globally, consequently aiding with market recovery, but

“If there is a resurgence of Covid-19 and very hard lockdowns are implemented locally or in countries that we supply, this will negatively impact on our operation”, states Hammond.

Community Benefits

The continuance of the ZAC mining operation is very important for the local communities it supports, with 90% of the workers and contractors at ZAC sourced from the surrounding communities.

More than 80 000 people depend on ZAC’s operations, and the majority of these people would be without an income, should the mine permanently shut down.

The company also invests heavily in community upliftment projects, with ZAC running educational and agricultural programmes, as well as operator and youth skills development and training. It also provides bursaries, learnerships and internships for local youth.

“During the care-and-maintenance period, ZAC continued with its social and labour plan (SLP) commitments, but those benefits do not compare with the loss of income the community incurred when the mine stopped operating. Local businesses and suppliers also took a knock. Further, ZAC supplies 40-million litres a year of drinking water to the community,” explains Hammond.

ZAC is very proud of the developments in terms of its SLP commitments. The company awarded 28 bursaries, 32 learnerships, 30 internships and assisted 30 Youth Employment Service learners in 2019.

It has also built and refurbished dams, provided water by sinking new boreholes, installed solar lights at strategic points identified by the Zululand district municipality and built toilets for 48 homesteads.

Meanwhile, ZAC is nearing its 4 500 fatality-free shift milestone. As of December 15, 2020, ZAC has recorded 4 474 fatality-free shifts and no lost-time injuries have been recorded in the past 16 months. The last lost-time injury was recorded in June 2019.

“These are great achievements that were realised by working together as a team, sharing ideas and information, and enforcing self-discipline and compliance,” concludes Hammond.