Coal will remain a significant player in the energy field, says Resource Generation (Resgen) chief executive Leapeetswe Molotsane.
He was speaking on Thursday at the signing by subsidiary company Ledjadja Coal of a 10-year deal with Transnet to transport rail export coal from the Waterberg coalfield in Limpopo to KwaZulu-Natal.
The R10 billion take-or-pay agreement will see Ledjadja Coal transporting 3.6 million tons per annum from its Boikarabelo Mine in Lephalale to the Grindrod Terminals at Richards Bay.
Resgen has a secondary listing on the Johannesburg Stock Exchange, with its primary listing on the Australian Securtities Exchange. The energy resource company owns 74% of Ledjadja Coal, with the remaining 26% held by Resgen’s empowerment partner Fairy Wing Trading.
“Much as the coal market share will come down, there is still an increase in demand for energy so in absolute terms we will certainly see an increase in coal consumption,” said Molotsane at the signing.
In addition to the 3.6 million tons of export coal, there are a further three million tons of domestic coal which Ledjadja mainly aims to supply to power utility Eskom. This deal is currently under negotiation.
The Waterberg coalfield is estimated to contain about 40% of South Africa’s remaining coal reserves.
The deal is expected to unlock coal mining opportunities in the region, which will be enabled by Transnet’s rail infrastructure (currently in phases two and three of construction).
Resgen will join the likes of Exxaro in the Waterberg area, with Boikarabelo mine being the most advanced, fully funded and permitted new mining project.
“Once there is this critical mass in that area we believe that other people will want to go to the Waterberg as well,” said Mike Fanucchi, Transnet’s chief customer officer. “We are speaking to others and I do believe that this will give momentum to further investment in the area.”
Fanucchi added that once Transnet’s rail expansion is completed there will be sufficient capacity for Ledjadja and other mines locally and in Botswana to send their coal through South Africa.
Boikarabelo mine is expected to deliver its first coal to port from June 2022.
Molotsane said the signing of the transportation agreement is significant for Resgen as it is one of the conditions to reach financial close. Another of the many conditions includes finalising the coal agreement with Eskom.
“This is a testament to what the private sector and public sector can actually do towards creating and rejuvenating the economy of this country,” said Molotsane.
The mine is expected to create 3 000 jobs during construction and provide 700 full-time jobs once it is operational.
“We are going to contribute tremendously to the fiscus, perhaps about R1 billion per annum in terms of income tax royalties, and we are going to rejuvenate the economy of Lephalale,” said Molotsane.