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Wescoal hopes for own output in 2 years
Julie Bain
Posted: Tue, 18 Mar 2008
[miningmx.com] -- COAL trader Wescoal intends to start to mine coal within a couple of years and has a number of possible prospects in Mpumalanga, KwaZulu-Natal and the Waterberg.
"We are applying for prospecting rights. We should come up with good news in the next year, at least getting some prospecting rights," said chief financial officer Petrus Janse van Rensburg.
If the prospecting rights come through and the resource is proved up the company may be mining in about two years time, he said.
Earlier this month Wescoal completed the acquisition of AtlantisCoal Estate CC and Express Technology CC. Wescoal, which listed in 2005, sells coal in the domestic market and because it does not have its own mines as yet it is not eligible to receive an allocation to export through Richards Bay Coal Terminal.
As yet, Wescoal is not an Eskom supplier and as such is
not benefiting form the increased demand from the power utility but it is affected by the wet weather that is knocking Eskom's coal supplies. Van Rensburg said a number of pits are flooded and the company has had to seek to source some of its coal from different mines.
"At this stage we are not supplying Eskom as we are not mining our own coal," said Van Rensburg. He is not complaining however as
business is brisk enough and the company has seen dramatic price increases as global demand for coal holds strong.
"We have seen a huge increase in the inland price of coal. Prices were up 60% on March 1st for B grade thermal coal," he said.
Van Rensburg said that when the company starts to mine its own coal it will have some grades suitable for sale to Eskom. Generally, Eskom buys lower grade coal than what is known as A grade coal, which is usually exported, or the B grade, which is sold to industrial users such as breweries that use steam in their production processes.
Wescoal currently supplies coal to a number of the municipality operated power stations such as Kelvin in Johannesburg, said van Rensburg. The company has a washing plant outside Witbank which processes 35,000 tonnes of coal a month most of which goes to industrial users.
When Wescoal listed three years ago the shares traded at 50 cents on the AltX. They now trade
around 90 cents.
In the six months to the end of September last year Wescoal said revenue was 43% higher than the comparative period, rising to R195m. Headline earnings increased by 156% to R7.4m compared to last year.
In November Wescoal, sold a 34.5% stake to empowerment company Waterberg Portion Property Investments which has a majority holding in Vuselela Mining. That company holds several mineral rights for platinum, manganese, iron ore and coal.
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