[miningmx.com] – A JOINT venture between unlisted businesses Lurco-Burgh has bought the washplant and rail siding, as well as the mining rights of Inyanda, a colliery shut by Exxaro Resources earlier this year.
Ellington Nxumalo, CEO of Lurco Group, said in an interview that the joint venture, which also consists of Burgh Group Holdings, would produce 25 million tonnes over five years through Inyanda, now known as Inyanda Beneficiation Complex.
The consideration for Inyanda was not disclosed, but Aubrey Chauke, CFO of Lurco and its joint founder along with Nxumalo, said it was meaningful and commercially sound. Exxaro CEO, Sipho Nkosi, described it as being “… based on solid business merits”.
In terms of the Lurco-Burgh proposal, the partners will produce high quality coal from the beneficiation complex sourced from a combination of owner-operated mines and via purchase agreements.
The coal would be sold to Eskom with an option to trade through the export markets although Nxumalo said any decision to enter the seaborne market for coal would be driven by his firm’s focus on generating a margin.
“We intend to supply 6,000 to 4,800kCal quality coal but we are first a business that will make decisions based on margin. If that means making a tough decision on exports, then we will make that decision,’ said Nxumalo.
Lurco also believes that the acquisition will be an important step in a fresh wave of consolidation in the South African coal sector. “We will use the complex to ignite that as a business,’ said Nxumalo.
He declined to say which assets interested the company, but the South African coal sector had become more fluid in terms of ownership following a decision by Anglo American to divest of its Eskom dedicated businesses, while financial hardship related to a decline in thermal coal prices had meant that major Eskom and export mines such as Optimum Coal and Arnot might potentially become available to other owners.
“We are currently monitoring the situation. CoAL been aggressive in the market,’ said Nxumalo referring to Coal of Africa’s $91m bid for Universal Coal, a domestic focused business listed in Australia.
“Right now we are following these players. There are some assets that we are eyeing, but they will have to talk specifically to our strategy as a business around beneficiation and supply of high quality coal,’ said Nxumalo.
Burgh Group Holdings is partly owned by Quinton van der Burgh, an entrepreneur working across sectors including earth-moving equipment and coal mining.
“Both companies understand the coal mining business well and we see a very exciting and prosperous future for this joint endeavour,’ said Van der Burgh.
