[miningmx.com] – COAL of Africa (CoAL) has awarded marketing rights for its thermal and coking coal production to Dutch trading group Vitol.
In a separate deal, CoAL has agreed with Grindrod, the diversified logistics and banking group, that it will not be required to provide its share of capital for the phase four expansion of the Maputo terminal in Mozambique (TCM) whilst it will retain its rights to use the terminal.
The Johannesburg and UK-listed firm said it had signed a memorandum of understanding in which Vitol would become the firm’s exclusive marketing agent for a period of eight years, excluding production from CoAL’s Makhado project which would be subject to a five-year marketing deal.
“This MOU not only formalises our strategic relationship with Vitol but also provides CoAL with access to a global marketing network that will greatly assist the development of export markets for our coking and thermal coal products as we bring our Vele and Makhado projects online,” said John Wallington, CEO of CoAL.
“In addition, our growing relationship with Vitol will assist CoAL with mitigating any take or pay obligations at TCM as we develop both Vele and Makhado and begin exporting,’ he said.
In terms of its MoU with Vitol, CoAL will continue to supply coal to marketers where there’s an existing arrangement, as well as to its strategic partners.
“We are delighted to have entered into this partnership with CoAL,” said Bob Finch, Head of Vitol Coal. “It expands our coal trading portfolio and reaffirms our commitment to the South African coal industry, as well as helping to develop the activities of TCM and underpinning the Phase IV expansion plans,’ he said.
In terms of the expansion of TCM, Grindrod is hoping to take terminal capacity to 10 million tonnes/year (Mtpa) in the so-called Phase 4A expansion by 2018, moving to 20Mtpa thereafter. The total capital for the development of RCM is $800m.
Grindrod sold a 35% stake in TCM, over which it has a long-term concession, to Vitol in January 2012 for $67.7m.
Grindrod’s deal with CoAL helps reduce the South African firm’s capital burden. Already, CoAL is expected to sell up to 24% of the company’s shares to China’s Beijing Haohua Energy Resource Group in return for a $100m capital injection.
