New black-owned coal-mine on way

15th June 2001 By: Irma Venter - Creamer Media Senior Deputy Editor

South Africa’s-fourth largest coal company wants to increase its production of 18,4-million tons of coal a year, to between 30-million to 40-million tons in five years.

Eyesizwe CEO Sipho Nkosi says the black-empowerment company is undertaking several studies into methods to increase production at its existing mines, as well exploration and feasibility studies on greenfields projects.

He adds that the company will, in all probability, make an announcement on a new greenfields mine in Mpumalanga in the near future.

One of Eyesizwe’s existing mines being probed for a capacity extension is Glisa colliery.

Eyesizwe was formed after a deal that allowed it to take possession of a range of assets from Anglo Coal and Ingwe.

The agreement consisted of the two Eskom-tied collieries of Matla and Arnot underground, the New Clydesdale operation, and Glisa colliery.

The deal includes an 800 000 t export entitlement at the Richards Bay coal terminal – a figure Nkosi wants to increase to about five-million tons in the next five years.

He says Eyesizwe is in serious negotiations with all other shareholders and participants at the terminal to increase the company’s entitlement.

Coined as an energy company, Eyesizwe is investigating possible involvement or ownership, with partners, in power generation and developing gas deposits.

This makes government’s privatisation process of Eskom all the more important to Eyesizwe.

Five months into its operations Nkosi reports that the company is meeting its payments with Absa and Nedbank.

An increase in coal prices from about $24/t free-on-board last year, to around $33/t this year also ensures much-needed cashflow.

An empowerment programme in terms of suppliers and management is under review at the moment and will be implemented at the company’s four mines once finalised.

Eyesizwe hopes to transcend the empowerment company tag – although the company does not mind the empowerment concept as it is a necessary tool for economic participation – by becoming an increasingly significant participant in the energy sector.

However, there are several barriers in doing so.

Nkosi believes Eyesizwe will never be able to compete with other participants in the local coal sector, such as Anglo Coal or Billiton, whose global operations ensure that coal can be shipped from ports with a low freight rate, should the current situation continue.

He says the company needs operations closer to global markets, which means Eyesizwe will have to make every effort to move beyond South Africa’s borders, not in base, but in expanding operations.