CoAL’s Vele to start output this year

[] — COAL of Africa (CoAL) expects to start production at its Vele colliery in South Africa still this year, with talks over its environmental hazards proceeding positively, its head said on Thursday.

CoAL, which is also listed in London and Sydney, said last week it had halted some construction activities at Vele after a government order which said they contravened environmental laws, sending its shares down.

CoAL CEO, John Wallington, said discussions with government were proceeding well, and he expected some solution to the dispute “within weeks”.

“I would say (Vele) will still start this year and I am pretty confident that we will,” he said.

Vele was initially scheduled to start production in the third quarter of this year, and Wallington said it would ramp up to produce 1 million tonnes of coking coal per year over a six-month period.

While the company said it had complied with the government’s regulations, it plans to put in place extra mitigation measures to minimise the project’s impact and assure the surrounding communities and environmental groups.

Several environmental groups had appealed to South Africa’s mining ministry against granting of a new mining right for the Vele Colliery on concerns that it might increase pollution at Mapungubwe, a World Heritage Site, located near the Kruger National Park, the country’s premier national wildlife park.

Wallington does not foresee any major financial impact from the delays, but said CoAL may need to temporarily suspend some stuff working on the project’s construction to contain costs.

The department directed CoAL to cease construction of some infrastructure that it said were in contravention of the country’s National Environmental Management Act. The infrastructure includes a storage facility and a sludge dam.

South Africa is one of the world’s top coal exporters, and the Vele colliery in the northern Limpopo province has an estimated resource of 813.5 million tonnes.

CoAL plans to spend R3bn ($413.9m) on the project and ramp up of the mine over two phases to produce 5 million tonnes of saleable coking coal per year.

Separately, Wallington said its Mooiplaats thermal coal project was on track to produce 1.7 million tonnes this year.