CoAL strikes Richards Bay deal

Johannesburg - CoaL of Africa (CoAL) has struck a five-year agreement with Transnet Freight Rail (TFR) for the export of coal from its Mooiplaats mine in Mpumalanga through Richards Bay.

The negotiations were first announced in August 2008 as part of a scheme through which CoAL and other junior coal companies sought an alternative export route to the established Richards Bay Coal Terminal (RBCT).

The coal will be railed as part of TFR's general freight allocation on the Richards Bay line and will be exported via the Dry Bulk Terminal (DBT) in Richards Bay harbour.

CoAL and the other juniors involved in the scheme will access the DBT from Grindrod's adjacent Kusasa handling facility.

CoAL MD Simon Farrell said in August: "We are going this route because it avoids a lot of the problems that the juniors are encountering trying to export through the RBCT."

That approach now looks almost visionary, given the increasingly heated discussions between the RBCT and the newcomers waiting to join the terminal through the Phase Five expansion which is due to be commissioned in July.

Well-placed coal industry sources maintain that RBCT members are seriously considering shutting the Phase Five exporters out of the terminal until TFR is able to rail 76 million tonnes annually (mt/year) to Richards Bay. TFR managed only 61.8mt during 2008.

Wagon allocation

The CoAL December quarter report published on Monday stated that TFR has allocated to CoAL the empty wagons returning to Richards Bay from ArcelorMittal's Vanderbijlpark steel works.

Those wagons are used to transport the coking coal that ArcelorMittal imports through Richards Bay for its steel works. They are smaller than the specially-designed wagons used specifically to haul coal to the RBCT.

This will allow CoAL to export at its initial planned rate of 900 000t/year through Richards Bay.

Farrell said TFR had agreed to allocate further wagons to allow the total target of 3mt/year of coal to be handled through Richards Bay if plans to expand facilities at the Grindrod terminal go ahead.

He added the coal washing plant at Mooiplaats is due to be commissioned in March. Production from the mine will start by the end of the first quarter of 2009, with the first coal sales to be made in the second quarter.

Mooiplaats took delivery of two continuous miners during the December quarter.

Turning to CoAL's coking coal projects in Limpopo, Farrell said a new order mining right (NOMR) was lodged with the Department of Minerals and Energy (DME) in October for the Vele project.

He said the NOMR application for the Makhado project was almost complete and would be submitted to the DME once Section 11 approval had been received for the swap of ground with Rio Tinto.

He said Vele was on schedule for mining to start in the second half of 2009, with the Makhado project due to start 12 months later. However, he added that "importantly, the ultimate timing of these projects remains a function of the NOMR being granted."

Farrell said the Vele mine production schedule had been revised to include both underground and open cast mining sections. This would reduce mining costs and extend the life of the mine to beyond 2040.

- Miningmx.com

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