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MC Mining announces Makhado Phase 1 Hard Coking Coal Off-Take

Coal News - Published on Sun, 23 Jun 2019

Image Source: SteelGuru
MC Mining Limited announced the completion of a major milestone for the company through the signing of an off-take agreement with ArcelorMittal South Africa Limited. The Agreement results in AMSA purchasing hard coking coal that will be produced from Phase 1 of the Makhado coking coal project. The Agreement reaffirms the quality of Makhado's HCC and follows the April 2019 announcement of an off-take with one of the world's largest producers and marketers of seaborne traded coal for all the by-product thermal coal to be produced by Phase 1. Completion of these off-takes satisfies a key requirement for the Makhado Project's economics and allows funding discussions to gain further traction with construction anticipated to commence in Q3 CY2019.

South Africa has a very limited production of high-quality metallurgical coal, resulting in AMSA and other coke producers having to import HCC for the manufacture of metallurgical coke, a key ingredient in the production of steel.

The key highlights of the Agreement are:

AMSA will purchase a minimum of 350,000 tonnes of Phase 1 HCC annually and has the right to acquire a further 100,000 tonne per year

The Agreement will endure for the shorter of ten years or the Phase 1 life-of-mine

HCC will be delivered to the Musina siding and railed to AMSA's Vanderbijlpark and Newcastle operations

The HCC will be sold on a FOR basis

Sales prices will be calculated on a monthly basis and are linked to a published, international US dollar denominated HCC index.

The Agreement is subject to various conditions precedent, including:

Confirmation by 15 December 2019 that the requisite funding for the development of Phase 1 has been secured

Confirmation by 30 June 2020 that delivery of HCC will commence within six months.

Phase 1 of the Makhado Project will result in the development of the west pit on the Daru and Tanga farms with a nine-month construction period expected to commence in Q3 CY2019 and will be followed by a one-month ramp-up. This phase will generate approximately three million tonnes per annum of run-of-mine coal that will undergo preliminary processing at the mine, yielding an estimated 2 million tonne per annum of residual coal. The residual coal will be transported to the existing, modified Vele Colliery for final processing, producing approximately 0.54 million tonne per annum of HCC and 0.57 million tonne per annum of export quality thermal coal that will be trucked to the Musina siding for dispatching to customers.

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Posted By : Sanju Moirangthem on Sun, 23 Jun 2019
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