JSE-listed coal-mining company South African Coal Mining Holdings (SACMH), is well on track with capacity upgrades at its Umlabu colliery in Ermelo, Mpuma-langa.
The Umlabu colliery currently exports 200 000 t through the Richards Bay Coal Terminal (RBCT), while it is awaiting its participation in RBCT phase 5, with an additional 500 000 t of export allocation. The group will also supply 1,2-million tons of coal to State-owned power utility Eskom as part of a three-year agreement.
SACMH executive director Melanie Steyn states that the com- pany will be spending R400-mil-lion over the next year, with the first R200-million going to a new railing system. The company will commission its new loading site, New Voorslag, at Umlabu Mine during October 2008, which is the first phase of construction.
Second-phase construction of a 10-km overland conveyor from the coal plant to the siding will also start at the beginning of October, while construction of a flask load-out system at the siding will start in the first quarter of 2009, she reports.
She adds that SACMH is also in negotiations with State-owned transport parastatal Transnet to electrify a railway line between the New Voorslag siding and Ermelo, which will add tremendous value to the mine. The electrification will assist in loading material at Umlabu, as well as increasing throughput and capacity at the new Voorslag siding.
In addition to opening up two more underground sections at Umlabu, SACMH will also add a new beneficiation plant which will provide a feed of 300 t/h. This mining infrastructure will equate to another R200-million capital injection.
Meanwhile, the company will pay a further R43-million to the RBCT for its phase 5 allocation.
Creamer Media’s Research Channel Africa reports that the company’s RBCT allocation has been increased from 17 250 t/m, to 58 850 t/m, to facilitate more exportation.
While operations at the Umlabu colliery have been progressing well, the company’s Ilanga mine, in Middelburg, has not been left behind. SACMH has refurbished the Blinkpan siding at Ilanga at a cost of about R13-million, and Steyn reports that the company is negotiating an agreement with Eskom to load 200 t/m at Blinkpan.
She explains that Eskom will be using the Blinkpan siding on a full-time basis to eventually load 200 000 t/m of coal. Further, 50 000 t/m of coal at Blinkpan will be exported.
Market Future and Outlook
Steyn comments that the outlook for the coal industry is buoyant, adding that coal has entered a new phase as a commodity over the last 18 months, but that there is a strong volatility in the coal market owing to the rising demand in exposure to the commodity.
She believes that the coal industry total turnover is R80-bill- ion to R90-billion, and that it is constantly on the increase owing to structural changes in the economics of costing, adding that the price of coal will continue to rise.
In addition, she reiterates the importance of an efficient supply chain, and states that mining operations are not about finding reserves and opening mines as fast as possible, but making provision for every single item in supply chain, which includes infrastructure such as water transport, road and railage.
Railage is major challenge for coal-mining in South Africa. While the RBCT has expanded and will continue to do so, the real challenge is to observe if Transnet can meet the demand for railage, she says.
She adds that Transnet needs to increase its capacity, while changing the rail network to service new mines that are not in the traditional grid of railage supply.
SACMH has recognised the skills shortage, but believes that one company cannot stand in for skills transfer in industry. It is tackling skills shortages by including its strategic partner, Fraser Alexander.
Steyn notes that the company makes good use of the skills it has, and adds that it is difficult for smaller mining companies to attract skilled people in the competitive environment of the coal sector.
SACMH also understands that it has the responsibility to make the industry accessible for young people, and believes that making resources available is an important area of development in sustainability, she adds.
Steyn acknowledges that consolidation in the industry is long awaited, but that it has not been achieved as was expected. However, she stresses the importance of consolidation in the coal market, which SACMH believes can be achieved by providing more access to infrastructure.
Following the company’s commitment to the national energy crisis, she notes that SACMH follows a somewhat different route to infrastructure concerns, which means that the company will make capital available in all elements of the supply chain in order to grow SACMH assets, as well as the coal industry.
By investing into commercial expansion, the company believes that the increase in capacity and throughput can also benefit the consolidation process in the coal industry.