Uni­ver­sal’s open cast mine is in op­er­a­tion

The Star Early Edition - - COMPANIES - Siseko Njobeni

SOUTH Africa-fo­cused coal miner, Uni­ver­sal Coal, has started op­er­a­tions at its New Cly­des­dale Col­liery’s (NCC’s) open cast mine af­ter it con­cluded a five-year, 650 000 tons per year ex­port con­tract with a global com­modi­ties trader, the com­pany said.

The open cast op­er­a­tion is the sec­ond phase of the planned 3.3 mil­lion tons per an­num run of mine NCC de­vel­op­ment, fol­low­ing the com­mence­ment of un­der­ground op­er­a­tions in Septem­ber last year.

High qual­ity

Lo­cated in Kriel in Mpumalanga, the NCC was ini­tially meant to be “a large Eskom-linked op­er­a­tion” sup­ply­ing the power util­ity with high qual­ity coal in two phases – an open-cut mine de­liv­er­ing up to 2 mil­lion tons per an­num run of mine ther­mal coal and an un­der­ground mine de­liv­er­ing up to 900 000 tons per an­num run of mine high qual­ity ther­mal coal.

But de­lays in se­cur­ing a sup­ply con­tract with Eskom prompted Uni­ver­sal Coal to pur­sue the low cap­i­tal in­ten­sive un­der­ground de­vel­op­ment first.

The high qual­ity coal from the de­vel­op­ment could be sold to the lo­cal and ex­ports mar­kets. A re­cov­ery in the global ther­mal coal mar­kets en­cour­aged Uni­ver­sal to con­sider ex­ports.

“With both the Eskom and the long-term ex­port off­take agree­ments now se­cured for NCC, the debt fund­ing is now near com­plete, thereby hav­ing al­lowed for the com­mence­ment of the Rood­ekop open­cast op­er­a­tion,” ex­plained Uni­ver­sal’s chief ex­ec­u­tive, Tony We­ber yes­ter­day.

“Ad­di­tion­ally, the long-term ex­port coal con­tract pro­vides us with sig­nif­i­cant ex­po­sure to the im­proved ther­mal coal ex­port mar­ket and fur­ther ad­vances our rev­enue di­ver­si­fi­ca­tion strat­egy.”

We­ber said Uni­ver­sal ex­pected NCC to gen­er­ate ro­bust cash flow, com­ple­ment­ing con­tri­bu­tions from Uni­ver­sal’s first mine at Kan­gala, Mpumalanga, thus po­si­tion­ing Uni­ver­sal well to fund fu­ture growth.

The high qual­ity coal from the de­vel­op­ment could be sold to the lo­cal and ex­ports mar­kets.

Uni­ver­sal said dur­ing the De­cem­ber 2016 quar­ter, NCC de­liv­ered first ex­port qual­ity coal sales to­talling 107 570 tons from the Diep­spruit un­der­ground op­er­a­tion at NCC, ramp­ing up from 27 710 tons in Oc­to­ber to 42 860 tons in De­cem­ber.

The long-term ex­port off­take con­tract for 650 000 tons per year with a ma­jor global com­modi­ties trader was for ther­mal coal which would be de­liv­ered on a free-on-rail ba­sis over a five-year pe­riod.

“The ex­port off­take con­tract is in ad­di­tion to the long-term coal sales agree­ment that Uni­ver­sal en­tered into with Eskom in Novem­ber 2016.

“The coal sup­ply agree­ment is for a seven year pe­riod, with first coal de­liv­ery to com­mence at the end of the first quar­ter of (fi­nan­cial year) 2017,” said Uni­ver­sal.

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