Exciting plans to open Waterberg treasure chest

29th June 2007 By: Helene Le Roux

South Africa’s largest diversified resources company, Exxaro, has big plans to open up the Waterberg coalfield’s treasure chest. The coalfield has an estimated resource of 75-billion tons of coal, which is 40% of South Africa’s remaining coal resource.

If Exxaro’s plans come to fruition, coal mined from the Waterberg coalfield will in future power South Africa’s new coal-fired base-load power stations, supply larger volumes of product to the local reductant market and the export market and could provide feedstock for other industries, including coal-to-liquids (CTL) and benzene, toluene and xylene (BTX).

In recent years, the development of the Waterberg coalfield has become synonymous with Ernst Venter.

Before becoming the executive GM of Exxaro Coal – which was created in October last year from the merger of Kumba Resources and empowered coal producer Eyesizwe – Venter headed a number of portfolios in Kumba Resources and its predecessor, Iscor.

However, his passion has been Grootegeluk, and his vision the development of the Waterberg coalfield.

Venter started his career as an engineer with Iscor, which opened Grootegeluk in 1980. “In those days, nobody else would give the Waterberg a second look, but we knew what we had. Mining the Waterberg coalfield has proved complex, but rewarding,” Venter tells Mining Weekly.

Grootegeluk is still the only coal mine that is currently exploiting the massive reserves of the Waterberg coalfield. The coalfield’s 75-billion tons are in 11 zones, which consist of bright coal with interbedded shale and dull coal, sandstone and carbonaceous shale.

To make mining economically viable, all zones need to be mined.

And the only economically viable way to access all 11 zones is by openpit mining.

However, only a relatively small part of the Waterberg coalfield is shallow enough to be accessed by openpit mining.

Department of Minerals and Energy coal and hydrocarbons chief minerals economist Xavier Prevost explains that the Eenzaamheid fault and the Daarby fault divide the Waterberg coalfield into openpit mineable and underground mineable resources.

Grootegeluk is located in the narrow band between these faults. South of the Eenzaamheid fault and in between the Daarby fault and the Zoetfontien fault, in the north, coal is found from 250 m below surface and deeper.

Some of the most efficient ways in which value could be extracted from the deeper part of the coalfield is by underground coal gasification technologies, such as coal-bed methane extraction.

Anglo Coal is reportedly one of the companies considering the possibility of using underground gasification technology to turn its Waterberg resource to account.

Exxaro is mining its resource – which is estimated at 12,1-billion tons – in a 38-million-ton-a-year run-of-mine openpit operation, yielding some 18,8 million tons a year of saleable coal; the rest of the material is waste.

Of the saleable coal, 14,6-million tons is supplied to Eskom for power generation, and an additional 1,7 million tons a year of metallurgi- cal coal is sold domestically to the metals and other industries on short-term contracts.

Grootegeluk produces 2,5 million tons a year of coking coal, of which about 1,6 million tons is railed directly to Mittal under a long-term supply agreement. About 1,1 million tons a year of semisoft coking coal and thermal coal is exported through the Richards Bay Coal Terminal (RBCT) as well as sold domestically.

Grootegeluk has the largest coal-beneficiation complex in the world, treating material at 8 000 t/h, and produces 12 final products. “Exxaro’s know-how to successfully beneficiate the Waterberg’s coals to meet market requirements is second to none,” Prevost tells Mining Weekly.

Good fortune to continue

Grootegeluk’s name has a prophetic ring to it. In the Afrikaans language, Grootegeluk literally translates into ‘great good fortune’.

Since the early 1980s, when the mine was established, coal-mining and coal-fired power generation have brought prosperity to the town of Lephalale (previously known as Ellisras) in Limpopo province.

The Grootegeluk coal mine and Eskom’s mine-mouth Matimba power station are located on Lephalale’s doorstep, and directly or indirectly employ most of the town’s folk.

Grootegeluk will be expanded to supply coal to the new R70-billion Medupi power station.

Medupi will be South Africa’s first new greenfield coal-fired power station in more than two decades, and will produce an estimated 4 500 MW when its last unit is commissioned in 2015.

Grootegeluk could increase current production of saleable coal – which is at 18,8-million tons a year – by 17-million tons a year to more than 35-million tons a year in 2016 to supply Medupi.

Venter says that a coal offtake agreement has been finalised with Eskom for the first phase of Medupi, which was originally known as project Alpha, and consists of the first three power-gener- ation units. A second coal-offtake agreement for the remaining three units of the power station is currently being negotiated.

Besides the brownfields expansion of the mine, Exxaro will consider other options to exploit its resources, for example, through other mines with the intention of expanding production to meet its target of achieving total production of 75-million tons a year by 2014.

Prevost says that potential increased production from the Waterberg will counter many of the supply concerns concerning the future abilities of South Africa’s coal industry.

Reserves in South Africa’s Central Coal Basin (including the Witbank coalfield), which has been the mainstay of production, are being depleted.

South Africa currently exports about 72- million tons a year of coal.

The export capacity of the country’s main export facility, the RBCT, in KwaZulu-Natal, is being increased to 91-million tons a year.

The export of coal earns valuable foreign currency. Moreover, coal-fired power stations generate more than 90% of the country’s electricity. “The development of the Waterberg coalfield will ensure that South Africa does not run out of energy coal any time soon,” Prevost adds.

It’s about beneficiation

Venter says that the ability to produce a multiplicity of beneficiated products will determine the success of Exxaro’s future plans in the Waterberg coalfield.

“In fact, the inability to beneficiate run-of-mine production of Waterberg coals actually destroys the potential value of these coals,” he comments.

Exxaro, and Kumba Resources before it, have been exploring ways to add downstream value to products.

As a result of this initiative, it is completing the construction of a new char plant.

The char plant, which will produce 0,16-million tons of alternative reductants in the form of retort char to the local metals market – including ferrochrome, ferroalloy and ferromanganese producers – will be commissioned in the last quarter of 2007 and is expected to ramp-up to full production in 2008.

The company is now fast-tracking a market coke project, for which it is busy completing a bankable feasibility study. The project aims to beneficiate sufficient semisoft coking coal to supply 0,8-million tons of market coke as a reductant to the local metals market.

Other downstream beneficiation possibilities under investigation include direct and indirect liquefaction technologies.

Indirect liquefaction technology, such as the Fischer-Tropsch process or CTL technology used by Sasol, are able to produce liquid fuels from coal.

Direct liquefaction technology, such as the Bergius process, can produce a group of hydrocarbon chemicals collectively known as aromatics.

Aromatics are divided primarily into BTX, and are used for the production of synthetic materials, including a variety of plastics.

Venter tells Mining Weekly that Exxaro has been in discussions with various stakeholders with respect to the various benefits such products can offer. One of the benefits of direct liquefaction is that it uses less water than indirect liquefaction. Various investments are under consideration and Exxaro could take a decision in the future based on its investigations in this arena.

Concerning the export of Waterberg coals, Exxaro is investigating possibly increasing its export quality coal output from the Waterberg together with other role-players in the region.

Substantial investment

In order for the Waterberg coalfield to be developed fully over coming years, substantial investment from a range of role-players will be required.

It is in Exxaro’s interests to encourage developments for coal offtake with investment coming from Eskom, which is expected to spend some R80-billion on the Medupi power station.

Exxaro’s capital expenditure for the brownfield expansion at Grootegeluk will run into several billion rands and further capital expenditure of about R1-billion for the char and market coke developments, depending on feasibility studies under way.

Venter says that Exxaro has been in discussion with the Limpopo provincial government to maximise the effect of the investment on the province and has proposed an industrial park to entice the providers of capital and industrial goods to set up shop in the province.

It is envisaged that investment in the region could create an estimated 7 500 direct jobs and 80 000 indirect jobs in Limpopo.

Exxaro has embarked upon a skills upliftment drive to create the manpower required by the expansion of its mining operations.

A concerted effort

The nature of the Waterberg coalfield does not lend itself to small-scale mining.

However, Venter points out that Exxaro does not have a “monopolistic view” of mining the Waterberg.

“We are working to the best of our abilities to foster collaboration across boundaries.

“The successful development of the Waterberg coalfield is not a one-company show and will require a concerted effort from all stakeholders.

“We are open to alliances and partnerships to achieve the best possible outcome,” he adds.