Firestone, Sekoko call off Jindal talks

[miningmx.com] — FIRESTONE Energy and Sekoko Resources have called off negotiations with India’s Jindal Steel over the development of two coal properties in Limpopo’s Waterberg area.

This came after the Firestone/Sekoko joint venture in February entered into a non-binding memorandum of understanding with Jindal, whose interest in the projects was based on the Indian giant’s need to secure coal for its power and steel operations in India. It was also considering investing in an independent power generation plant.

Sekoko chairperson Timothy Tebeila said on Wednesday a transaction would have meant an adjustment of the ownership interests in the two properties.

At present, Sekoko holds a 40% interest in the JV, with Firestone holding the remaining 60%. However, Sekoko also holds a 38% stake in Firestone, giving it an effective 58% share in the projects.

“The primary focus of Firestone will continue to be bringing the Smitspan project into production to supply coal offtake to Eskom and developing the metallurgical coal deposit which we have identified on our southern farms,’ said Firestone chair David Perkins.

The JV in January secured an offtake deal with Eskom to supply contract coal to the power utility from April 2012. According to the agreement, the JV would deliver 525,000 tonnes per year to Eskom until March 2015, and 1,000,000 t thereafter for another three years.

The parties were continuing to negotiate the further supply of up to 2,300,000 t per year until 2032.

“Everything is on track to start the offtake in April,’ said Tebeila. Among the outstanding issues was the construction of a 10km rail loop to the main Transnet Freight Rail line, which Tebeila said should commence soon.