The minister told Reuters the company was carrying out “illegal activities” at the mine which is under development.

She added the government would look into whether the company met the environmental obligations and could even halt further development of the mine.

Coal of Africa responded to the allegations yesterday.

“All activities undertaken at the Vele Colliery have been carried out in accordance with the new order mining right granted for the Vele Colliery and the company has not undertaken any activities for which authorisation has not been given,” the triple-listed company said.

“The company is unaware of the alleged ‘illegal activities’ referred to in the press article and is therefore seeking an immediate meeting with the minister to identify and address any issues and concerns.”

In February, the company gained full ownership of the Vele open cut project and the first phase development is aiming for first coal in the next two months.

Phase one development is targeting 1 million tonnes per annum of coking coal while a later second phase will lift production to 5Mtpa of saleable coking coal.

During the June quarter, Coal of Africa created about 850 jobs at Vele with most of the workers coming from the nearby towns of Musina and Alldays.

Another 450 jobs should be created once the mine goes into production.

The final exploration and confirmatory drilling was also completed in the recent quarter – three months ahead of schedule.

The project contains 813.5 gross tonnage in situ and 690 mineable tonnage in situ of resources.

In the March quarter, Coal of Africa became a notable thermal coal producer on the back of its acquisition of NuCoal Mining and its Woestalleen colliery and associated open cuts.

A total of 1.05Mt of run-of-mine coal was produced from these mines in the June quarter with roughly half sold as high-grade thermal coal while 137,391t was sold to utility Eskom.

The result was achieved in spite of a three-week strike by Transnet Freight Rail during May.

The company’s Mooiplaats underground mine produced 94,514t of ROM coal in the June quarter.

Development work is expected to allow a ramp up to 190,000-200,000t of ROM coal per month by the end of 2010.

Coal of Africa is also preparing to offload its Holfontein coal project with a formal sales process to start up in the next couple of months.

Coal of Africa shares closed down 1c yesterday to $1.72.