JOHANNESBURG (miningweekly.com) – Run-of-mine (RoM) coal production for Coal of Africa Limited (CoAL) decreased from 1.15-million tonnes in the second quarter of the 2013 financial year to 911 563 t in the third quarter, as a result of the depletion of the Vuna colliery resource, flooding at the Vele colliery and the declaration of a force majeure following the derailment on the Matola rail line.

The derailment on the Matola rail corridor, operated by Transnet Freight Rail (TFR), in February, led to the suspension of all rail traffic to the port and resulted in the suspension of mining activities at the company's three collieries.

As a result, export coal sales from the Matola terminal decreased by 34% to 271 069 t for the quarter ended March 31, down from the 411 292 t in the prior year’s comparable quarter.

The junior coal miner reported that it had implemented measures at its operations to mitigate the commercial and operational impact of the force majeure, was in the process of compiling a business interruption insurance claim and expected to resume the export of coal next month.

This followed confirmation by TFR that the Matola railway line was reopened on April 19. 

“The bridge has been repaired and the commissioning has been completed, with rail operations expected to return to normal levels in May,” outgoing CEO John Wallington said in an operational report on Monday.

Meanwhile, heavy rainfall in the Limpopo province further impacted on production from the Vele colliery, which received over 500 mm of rainfall in four days, flooding the pit and halting operations for three weeks in January.

While Vele continued to produce saleable export-quality thermal coal for part of the reporting period, RoM production decreased to 78 273 t in the March quarter, from the 194 495 t produced in the second quarter of the year.

In addition, as a result of the Vuna colliery's coal reserve being depleted in March, RoM coal production decreased by 23.7% from 845 834 t in the December 2012 quarter to 645 742 t in the period under review.

A portion of the RoM coal mined at the colliery was delivered to State-owned power utility Eskom and the balance was processed to both an export grade product and a middlings product for Eskom, increasing coal sales to the parastatal from the previous quarter's 264 169 t to 288 967 t.

Coal sales to the domestic market, meanwhile, declined by 27.1% to 112 440 t from 154 186 t in the third quarter of the prior year as a result of reduced availability of coal at Woestalleen.

Index-linked export-quality thermal coal prices for the period remained under pressure and declined from $87/t in July 2012 to $85/t at the end of March.

Meanwhile, CoAL received some good news over the period, with confirmation from energy and metals industry research firm Wood Mackenzie that its Makhado coking coal project, located in the Soutpansberg coalfield, had the potential to produce a hard coking coal product.

The Makhado project had the potential to produce about two-million tonnes a year of hard coking coal and three-million tonnes a year of thermal coal.

"The third-party confirmation of Makhado’s product quality as hard coking coal, supports management's technical assessment and augurs well for the development of the project and placing the product into the market,” said Wallington.

The company was currently awaiting the granting of the new-order mining right for Makhado, subject to the completion of a black economic-empowerment transaction for the project.

By mutual consent, Wallington has announced that he would not renew his contract as CEO and would leave the company on May 31.

Chairperson David Brown would take over as interim CEO for six months while a successor is recruited.