Coking coal production to boost Limpopo

2011-07-10 09:41

Johannesburg - The exploitation of coking coal could mean a tremendous injection for the Limpopo Province, South Africa's poorest province.

So says John Wallington, chief executive of CoAL of Africa, which this week finally received permission to develop the new Vele Mine near the Mapungubwe World Heritage site.

The company was involved in fierce controversy with environmental groups and at one stage was prohibited from proceeding with the mine.

The Vele Mine hopes to start producing coking coal within months.

Wallington said that within the next decade Limpopo could produce 10m tonnes of coking coal a year – which would mean that, from being a country importing coking coal, South Africa could become an exporter of up to 10m tonnes.

To the province this would mean annual inflows of millions.

Wallington said the figures were based on his knowledge of the coal industry, having previously been chief executive of Anglo Coal.

Coking coal is used for most metallurgical blast-furnace processes, but particularly for steel production.

When exploration for coking coal was done in the old Iscor days, the methods and the exploration techniques were of such a nature that they underestimated the amount and quality of the product, he said.

Better techniques exist today, but at that time the price of coking coal did not command the premium that it does today.

The price of coking coal has shot up over the past decade or so since China and India's economic growth began to accelerate.

The demand for, inter alia, steel to build the country's infrastructure also pushed up the demand for coking coal for blast furnaces.

Coking coal helped Australia’s strong growth as a mining country because two-thirds of the world's shipped coking coal today comes from that country.

Australia currently produces 160m to 170m tonnes a year – all from Queensland province.

The floods in that part of Australia some seven months ago sent the price of coking coal rocketing to $350/tonne. The price is now around $300/tonne – still high, and about double the price of power-station coal.

At an average price of $200/tonne, 10 million tonnes a year would mean an inflow of $2bn or R15bn a year for Limpopo.