MC Mining has suspended the restructuring of its Uitkomst metallurgical coal mine in KwaZulu-Natal province after a blockade by employees resulted in three lost production days, equal to 8,000 tons of run-of-mine coal.
The process, which was intended to make 42 positions at the struggling colliery redundant, will resume in June, the company said in a third quarter update today.
Uitkomst produced 115,944 tons of metallurgical coal in the three months ended March, a year-on-year decline of 9%. Metallurgical coal is used in the steel-making process whereas thermal coal is burned at power stations to produce electricity.
Production at Uitkomst was also affected by sub-optimal geological conditions whilst sales were 17% lower in the quarter owing to a six week shutdown of steel-making facilities of a major customer. The lower sales resulted in 20,494 tons of saleable coal in inventory most of which would be sold by the fourth quarter, the company said.
Production of coal from Uitkomst is MC Mining’s only source of revenue. The company is focused on the development of Makhado, a R575m metallurgical and thermal coal project situated in South Africa’s Limpopo province.
A loan repayment agreement with the Industrial Development Corporation (IDC) for Makhado has been pushed out to the year-end whilst the company marries future projected cashflow from Makhado against the IDC’s proposed funding package, the completion of which requires a further R120m from an, as yet, unknown third party.
