May 17, 2008

Wescoal hopes for own output in 2 years

miningmx.com reported that coal trader Wescoal intends to start to mine coal within a couple of years and has a number of possible prospects in Mpumalanga, KwaZulu Natal and the Waterberg.

The report quoted Mr Petrus Janse van Rensburg CFO of Wescoal as saying that “We are applying for prospecting rights. We should come up with good news in the next year, at least getting some prospecting rights.” He added that if the prospecting rights come through and the resource is proved up the company may be mining in about two years time.

Mr Van Rensburg said that when the company starts to mine its own coal it will have some grades suitable for sale to Eskom. Generally, Eskom buys lower grade coal than what is known as A grade coal, which is usually exported, or the B grade, which is sold to industrial users such as breweries that use steam in their production processes.

Earlier this month Wescoal completed the acquisition of AtlantisCoal Estate CC and Express Technology CC. Wescoal, which listed in 2005, sells coal in the domestic market and because it does not have its own mines as yet it is not eligible to receive an allocation to export through Richards Bay Coal Terminal.

Wescoal currently supplies coal to a number of the municipality operated power stations such as Kelvin in Johannesburg. It also has a washing plant outside Witbank which processes 35,000 tonnes of coal a month most of which goes to industrial users.