[miningmx.com] – COAL of Africa (CoAL), the R1.6bn coal production and
exploration firm, has ended a six-week strike at its Mooiplaats colliery.
Commenting in its September quarter operating results, CoAL said an agreement to
end the strike, which had been called by the National Union of Mineworkers (NUM),
was signed on October 31. It didn’t give details of the settlement but management had
previously offered a 22% wage offer against calls for a 33% increase.
However, the company continued to struggle in the face of lower export thermal coal
prices which it estimated had fallen nearly 20% this calendar year and some $7/t
quarter-on-quarter to $87/t.
CoAL said there had been a softening in demand in the quarter which, coupled with
lower throughput capacity at the Matola Terminal in Maputo, has seen the export
component of its sales profile almost halve to 224,972 tonnes in the September
quarter compared to the previous June quarter.
The company also produces coal from its Woestalleen colliery, a mature operation
that CoAL is hoping to extend, as well as from Vele – the contested Limpopo province
coking coal operation which is in build-up phase.
Domestic sales, meanwhile, had remained firm but Eskom business fell nearly a
quarter owing to contract negotiations.
CoAL said it had deferred coal deliveries to Eskom pending a new offtake agreement
which was eventually completed in August. In terms of the one-year supply deal, CoAL
will sell 1.14 million tonnes (Mt) to the electricity utility.
All in all, CoAL saw run-of-mine coal production fall slightly to 1.2Mt in the September
quarter from 1.3Mt in the previous quarter. CoAL has a June year-end.
The lack of production from Mooiplaats, where a force majeure had been called owing
to the strike, and poor market conditions, does not bode well for CoAL’s cash flow.
Yet the company’s balance sheet is in better shape than a year ago.
The company recently raised debt through Investec and Deutsche Bank, issued shares
and in October said it would sell $100m in shares to Beijing Haohua Energy Resource
Company (BHE), making the Chinese firm the largest single shareholder.
Already a $20m provisional payment has been made to an escrow account pending
approval from Australia’s Foreign Investment Review Board (Firb), called in to
adjudicate as CoAL has shares listed on the Sydney Stock Exchange.
