Coal pricing was more stable in South Africa’s domestic market than in export markets, where South Africa was competing with Colombia and Russia for European market share and with Australia for Indian business, JSE-listed Exxaro said recently, when it outlined a five-year, R16-billion capital expenditure (capex) plan.

The black-controlled company, headed by CEO Sipho Nkosi, said that global coal was in oversupply and domestic demand, though stable, was not growing materially.

At the same time, in a presentation on mining and infrastructure developments, Exxaro outlined a programme of expenditure extending to 2019 on a mixture of brownfield, greenfield and downstream coal beneficiation projects in the Waterberg, South Africa’s big new coal focus.

The capex roll-out, beginning with an outlay of R3-billion next year and peaking at R5.2-billion in 2017, involved more expansion at the company’s flagship Grootegeluk operation and the development of the proposed new Thabametsi coal mine’s north and south phases, as well as augmentations to the semicoke and market-coke value-add plants, and a 600 MW Phase 1 electricity generation coal-fired power plant in partnership with an independent power producer.

Sustaining capital, the company added, would take in truck and shovel replacement, stacker-and-reclaimer expenditure and slime handling, along with outlays on internal enabling in the form of an in-pit crusher, a load-out station and a 200-wagon train in close liaison with Transnet, which was committed to boosting rail logistics from the Waterberg to the export port at the Richards Bay Coal Terminal.

Exxaro reported that coal qualities below Richards Bay One were under downward price pressure on the export market because of the exceptional growth of hydropower in China, which was depressing demand for coal-fired power generation in the Asian country.

Prices were, however, expected to edge up in the latter part of the year as the northern hemisphere restocked for winter.

With production of 40-million tons of power station, steam and coking coal from seven mines, Exxaro is South Africa’s third-largest coal producer after Anglo American and Glencore.

More than 43% of the coal was produced by its Grootegeluk coal mine, in the Waterberg, which stretches 40 km from north to south and 80 km from east to west into Botswana.

Waterberg’s Ecca coal deposits total 75.7-billion tons of inferred resources and Exxaro has the country’s largest reserve and resource base, 87% of it in the Waterberg, where the mineable coal seams are much thicker than the seams of South Africa’s traditional Witbank and Mpumalanga coalfields, which are depleting.

Extraction of power-station-type coal in the Waterberg coalfield facilitates the liberation of higher value coal, with intensive beneficiation then being required to extract full value, which dovetails with Exxaro's stated strategy of being innovative, integrated and synergistic.

All its power station coal is supplied to State electricity utility Eskom and municipal power stations and higher-value coal is beneficiated for the metals and reductants markets.