LSE-listed firm ramps up coke production plans
LONDON Stock Exchange-listed Contango Holdings expects to start coke manufacturing for steel and ferroalloy industries this year at its Matabeleland North-based Lubu coal mining project.
Contango has a 70% interest in the Lubu coal project in Zimbabwe with the remaining 30% held by local partners.
The company is expected to sell washed coking coal to regional buyers as well as export to South Africa, where it has held discussions with interested parties.
“Contango is expecting to be able to capture the full value for its product by subsequently manufacturing coke at the site for use in the steel and ferroalloy industries later this year,” the company said.
An initial smaller scale coke battery of 36 000 tonnes per annum has been sourced and a larger coke battery of 150 000 tonnes per annum is expected to be installed towards year-end.
With the sale prices being subject to off-take and future global pricing, Contango is confident that margins in excess of US$300/tonne should be achievable based on ongoing discussions with potential off-takers.
This comes after production of coal at the Lubu coking coal project began last month with an estimate of 5 000 tonnes per month. The project developers, Contango Holdings are also on the Garalo-Ntiela Gold Project in Mali. The Lubu Coal project covers 19,236 hectares of the highly prospective Karroo Mid Zambezi coal basin, located in the established Hwange mining district in north-western Zimbabwe.
“As previously reported, Contango will stockpile production during the second quarter of this year pending installation of the wash plant in the same period, thereby providing sufficient feedstock to ensure continuity of supply,” the mining company said.
Studies have defined an estimated 96Mt of coking coal within Block 2, which forms part of the broader Lubu complex, where an estimated 1,25 billion tonnes indicated and inferred resource has been identified to NI 43-101 levels.
“The resource at Lubu is significant and we are now finally in a position to start to receive the economic benefits. Coking coal and coke have suffered from significant under-investment and mine closures in recent years and this, coupled with global infrastructure projects and transition towards green energy, have led to a significant uptick in the commodity prices of both coking coal and coke,” the company said.
Accordingly, Lubu has come into production at a time of substantial demand for the product and limited supply.
The mining firm is currently preparing for the installation of a crushing unit, wash plant, and associated infrastructure.