Anglo Coal, Eyesizwe plan to spend R1.6bn on expansion
August 18, 2004
By Nicky Smith
Johannesburg - Anglo Coal and empowerment company Eyesizwe Coal were likely to invest R1.6 billion within a year to expand their Mafube Colliery 50:50 joint venture, the companies said yesterday.
The expanded opencast mine would supply both the local and export markets.
Anglo Coal is wholly owned by the world's second-biggest resources company, Anglo American.
John Wallington, Anglo Coal's chief operating officer, said the initial R26 million investment in establishing Mafube was only the beginning of what could be bigger and better things.
Mafube's current production would fulfil a 1.2 million ton-a-year contract for the nearby Arnot power station. Deliveries to the power station started last month.
Wallington said the expanded mine would produce up to 5.5 million tons of coal a year. About 3 million of this would be for export.
The mine has an estimated lifespan of 20 years.
A feasibility study would need to be finalised before any expansion was undertaken, Wallington said. Rail capacity would be "a big issue", as would the capacity at Richards Bay coal terminal.
Of the 72 million tons that go through Richards Bay each year, only 2 million tons had been set aside for empowerment companies, but this was expected to grow to 4 million tons in the next three to four years.
"Obviously a lot of the feasibility study relies on the expansion of the Richards Bay coal terminal," he said. Anglo Coal was talking to Spoornet continuously about infrastructure and there was a risk that inadequate infrastructure could jeopardise expansion at Mafube.
Eyesizwe already has a 5 million ton-a-year contract with Eskom, which it got in an empowerment deal with Anglo Coal and BHP Billiton's Ingwe Collieries in 2001.
Wallington said that the expansion project, if it was approved, would employ as many as 1 000 people.
Eyesizwe chief executive Sipho Nkosi said the deal was "another chapter in empowerment ... the type we need to see where people get their hands dirty and get involved operationally".
In a related transaction also launched yesterday, an empowerment transport company, Nomakanjani, was launched.
It has secured a three-year R40 million contract with Arnot North Colliery to transport Mafube's coal to the power stations and elsewhere.
Nomakanjani is owned 30 percent by Imbani Resources, 14 percent by Bakgotsi Holdings, 30 percent by Unitrans and 26 percent by Anglo Zimele, Anglo American's empowerment incubator.
Phumzile Mlambo-Ngcuka, the minister of minerals and energy, said the coal industry was poised to grow and become more competitive.
"Its economic empowerment component, reaching only 9 percent until last year, is growing fast, and the department is forecasting an increase to at least 30 percent by the end of 2004," she said.
She said she had very high expectations of the project and praised it for having black people operationally involved.
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