JOHANNESBURG – Wescoal’s flagship Elandspruit Colliery is hitting its monthly production target of 165,000 tonnes (t) of run-of-mine (ROM) coal on a continuous basis.
In a voluntary trading update, the miner said development at the Mpumalanga mine is at an advanced stage, with upgrades carried out on haulage roads and water control systems. “Work at the Wescoal processing plant to implement cost-saving and debottlenecking projects is on track to be completed before the end of the current financial year,” it added.
Wescoal has reported “progress” in acquiring resources contiguous to its Khanyisa Colliery. It has also reached an agreement, subject to approval from the Department of Mineral Resources, which may extend the life of mine by three to four years. It said mining activities at Khanyisa are subject to the receipt of a water use license, for which it applied in February 2015.
Since receiving a water use licence for its Intibane Colliery in December 2015, it ramped up activity at the mine, which is on track to reach a steady state production target of 80,000t of ROM coal. Higher production at the colliery is expected to assist with cost management. “…Increased production from Intibane will help drive volume based cost dilution and recent equity injections will reduce interest costs slightly,” said Wescoal.
In spite of the challenging local business environment and pressure on operating margins, Wescoal said its trading division continues to meet expectations.
Although less than expected, it said the R52 million raised through recent fund raising initiatives was “sufficient to initiate crucial de-risking and optimisation projects” across the company.
Wescoal, which produces domestic, export and Eskom grade coal, said an oversupply in the global coal market had negative impact on domestic and export price expectations. “However, the weakening exchange rate will have a positive impact on the rand price of export coal going forward,” it said.