[miningmx.com] — STATE-owned mining company African Exploration Mining and Finance Corporation (AEMFC) would “never’ be bailed out at taxpayers’ expense should it fall on difficult times, according to Mines Minister Susan Shabangu.
Speaking to Miningmx on Thursday, Shabangu said AEMFC – supposed to deliver its first coal order to Eskom from the Vlakfontein colliery this month – would soon have to stand on its own feet. “It has to be profitable like any private business,’ Shabangu said.
“Bailouts from the state would never be an option.’
AEMFC, currently part of the Central Energy Fund (CEF), was in November indicated by cabinet to become the nucleus of the state’s participation in the mining industry.
It would in future operate as a stand-alone entity. It is yet to be decided which government department would house the company.
The company started construction of an open pit at Vlakfontein in February.
According to Shabangu, the R130m project has been funded by loans from the African Development Bank and the Industrial Development Corporation, with the CEF acting as a guarantor.
The companies most immediate priorities, according to Shabangu, would be to come forward with a strategy for the exploitation of the prospecting rights it has been issued so far.
The rights span seven of the nine provinces, with the exception of the North West and Western Cape.
“They’ll need to come up with a clear plan on how they will maximise the rights they’ve been granted so far,’ said Shabangu. “And we’ll treat them like any other. If they don’t utilise those rights they will lose them when the time comes.’
Shabangu added other state mining assets – it owns a majority stake in diamond miner Alexkor – would soon be consolidated within AEMFC.
The Vlakfontein mine has total reserves of 33 million tonnes, and would initially produce 800,000 tonnes per year increasing to 1,6 million tonnes, depending on demand. The coal would have calorific values of between 19 and 22.
Between 150 and 200 people have been employed during the mine construction phase, and 120 once mining operations began.
