COAL mines producing about 2.2 million tons a year (Mt/y) would not reopen until 2021 after being placed on care and maintenance earlier this year, said Vulsat Bayoglu, MD of Menar Holdings.
Menar, an unlisted company headquartered in Luxembourg, stopped operating at Kangra Coal in Mpumalanga and KwaZulu-Natal’s Zululand Anthracite Coal (ZAC) amid the COVID-19 related lockdowns announced by the South African government in March.
“Their markets have been destroyed, especially the anthracite market. I’m hoping the mines can be back next year, but this year is lost,” he said.
ZAC supplies anthracite to the ferrous metals industry which has been heavily affected by reduced demand since COVID-19 was declared a pandemic.
“I have not seen the V-shaped recovery from China and demand from customers such as Samancor and Glencore is low,” said Bayoglu. In January, Glencore began a Section 189 restructuring process of its 430,000 tons per year Rustenburg ferrochrome smelters.
Some smelter activity was allowed during the government’s hard lockdown in March, but Glencore said it would keep its Boshoek, Rustenburg, Wonderkop, Lydenburg facilities, and its Kroondal mine in mothballs until market conditions improved.
Menar acquired ZAC from Rio Tinto in 2016. It bought Kangra a year earlier in a $28m deal that secured it strategically important access to export entitlement at Richards Bay Coal Terminal (RBCT). Bayoglu said the export market now was currently depressed.
“As a country we supply about 65% of our production to India, but that country is in lockdown and many south-east Asian buyers of coal are consuming as they were before.
“We want to get back as soon as possible because we know the importance of jobs to South Africa,” said Bayoglu. “I am generally positive on the opportunities open to us because the current crisis gives us an opportunity to restructure the business and make it more efficient.”
Menar, which is in joint venture with Swiss commodities trader, Mercuria has some R7bn in coal expansions planned with production forecast to total 20Mt by 2022.