Adverse conditions hit CoAL production

A DERAILMENT and a flood resulted in a decrease in production for Coal of Africa Limited (CoAL) in the third quarter of the 2013 financial year.
Adverse conditions hit CoAL production Adverse conditions hit CoAL production Adverse conditions hit CoAL production Adverse conditions hit CoAL production Adverse conditions hit CoAL production

The bulk sample pit at the Makhado project in the foreground with coal stockpiles further behind it. Image courtesy Coal of Africa.

Staff Reporter

CoAL said run of mine coal production decreased from 1,153,486 tonnes in the previous quarter to 911,563 tonnes due to depletion of the Vuna colliery resource, flooding at Vele and the derailment on the Matola rail corridor and the resultant force majeure that caused a slow-down or suspension of mining activities the company’s three collieries.

As a result, export coal sales from the Matola terminal decreased by 34% to 271,069t for the quarter ended March 31, down from the 411,292t in the prior year’s comparable quarter.

CoAL chief executive officer John Wallington said the company experienced a difficult quarter.

“During the quarter, conditions remained challenging with a number of issues affecting production and furthermore commodity prices remained depressed,” he said.

“The Vele colliery received over 500mm of rainfall in four days resulting in the flooding of the pit that caused delays in production and product testing.

“The reported derailment and subsequent collapse of a bridge on the Matola railway line on 18 February 2013 prevented the export of thermal coal for the balance of the quarter.

“The bridge has been repaired and the commissioning has been completed, with rail operations expected to return to normal levels in May 2013.”

While Vele continued to produce saleable export-quality thermal coal for part of the reporting period, run of mine production decreased to 78,273t in the March quarter, from the 194,495t produced in the second quarter of the year.

In addition, as a result of the Vuna colliery's coal reserve being depleted in March, ROM coal production decreased by 23.7% from 845,834t in the December 2012 quarter to 645,742t in the period under review.

CoAL received some good news over the period, with confirmation from industry research firm Wood Mackenzie that the company’s Makhado coking coal project had the potential to produce a hard coking coal product.

The Makhado project had the potential to produce about 2 million tonnes per annum of hard coking coal and 3Mtpa of thermal coal.

"The third-party confirmation of Makhado’s product quality as hard coking coal supports management's technical assessment and augurs well for the development of the project and placing the product into the market,” Wallington said.

Cash outflow from operations for the period was $US12.1 million compared to $17.6 million in the previous quarter.

Coal sales to Eskom increased slightly during the quarter but sales to the domestic market declined 27.1%

The company also said export quality thermal coal prices remained under pressure, declining from $87 per tonne in July 2012 to $85 per tonne at the end of March 2013.