Foreigners pile into SA’s red-hot coal sector
Desperate demand and rocketing prices transforming the industry
SOUTH AFRICA’S COAL SECTOR continues to attract intense interest overseas as companies position themselves to supply Eskom as well as possible independent power producers (IPPs). Australian Stock Exchangelisted (ASX) Firestone Energy (Firestone) intends listing on the JSE after agreeing to spend around R110m to buy 30% of two coal projects in the Waterberg.
Firestone’s local partner is Sekoko Coal, and Firestone has agreed to spend another R50m on taking the projects to the bankable feasibility study stage, which will increase its stake to 55%. The mines will produce thermal and metallurgical coal for both the domestic and export markets.
On 1 October, Toronto Stock Exchangelisted Homeland Energy (Homeland) held the official opening of its Kendal colliery, which began production in July and is currently ramping up to full run-of-mine production of 1,8m t/year. The coal produced is thermal coal, to be sold to domestic industrial customers, and Homeland says it’s contracted to deliver 500 000t to customers by end-September next year. Homeland may list on the JSE next year.
SNR is developing the Elitheni coal mine at Indwe
in the Eastern Cape.
JSE- and ASX-listed Coal of Africa (CoAL) says it’s entered into supply agreements with two separate IPP operators for its Makhado and Vele coal projects in Limpopo Province. Both mines are being planned as producers of coking coal but may need a consumer for their “middling” products of lower-grade thermal coal to ensure economic viability.
CoAL MD Simon Farrell declines to name the IPP operators but adds he’ll do so once Eskom publishes its “short list” of IPP projects it’s considering buying power from.
Another coal group set to supply an IPP project is London AIM-listed Strategic Natural Resources (SNR), which is developing the Elitheni coal mine at Indwe in the Eastern Cape, 300km north-east of Port Elizabeth. That’s a long way from SA’s traditional coalfields in Mpumalanga, Limpopo and KwaZulu-Natal provinces.
The spur for the development is the coalfired power plant being built at Indwe by IPSA Group (Ipsa), which is listed on London’s AIM as well as the JSE’s AltX.
SNR blasted the first coal at Elitheni early in September and also published increased coal reserves statistics for the mine. As a result, Ipsa is looking at doubling the generating capacity of the power plants it intends building in the Port Elizabeth/East London region from 500MW to 1 000MW (see story on page 35).