JOHANNESBURG (miningweekly.com) – Coal beneficiation and the future supply of beneficiated coal for energy generation in South Africa has received a significant boost following a joint venture (JV) partnership between Lurco Group and Burgh Group for the acquisition and development of a coal beneficiation complex in the eMalahleni district, in Mpumalanga.

The two parties concluded a sale and purchase agreement to acquire diversified miner Exxaro’s Inyanda colliery, including the mining rights, assets and a private rail siding, for an undisclosed amount. This would enable the 51:49 JV to beneficiate coal for use by Eskom, as well as for supply to the export market.

More than 25-million tonnes of coal would be made available for the domestic and export markets over the next five years.

The plant had a current washing capacity of 200 000 t/m, but, with additional crushing and screening capabilities, it would be able to beneficiate between 200 000 t/m and 300 000 t/m more.

“This acquisition enables us to meet significant demand for quality coal, both locally and abroad. We will source, beneficiate and move coal from our own reserves, that of the Burgh Group, as well as other reserves in the eMalahleni coalfields,” Lurco CEO Ellington Nxumalo stated.

The beneficiation plant was centrally located in the eMalahleni district and had the benefit of the Blackhill private rail siding, bringing additional logistics value and opportunity for Lurco, particularly with the adoption of the road-to-rail integration plan as announced by Transnet Freight Rail.

“The private and fully compliant siding provides excellent access to freight for our export of coal,” Nxumalo added. The JV also revealed that there were plans to expand the complex.

Exxaro CEO Sipho Nkosi noted that Inyanda was one of Exxaro’s flagship mines and that now, after depletion of the Kalbasfontein and Pegasus South coal reserves, the well-maintained infrastructure would continue to generate value in the hands of the JV and be put to good use for beneficiation. "The deal is commercially sound based on solid business merits,” he pointed out.

Meanwhile, Nxumalo highlighted that the JV did not expect any strife with Eskom, as had recently been the case between Exxaro and the power utility with regards to its Arnot mine, as the two companies “have had a very good relationship” with the power utility.

The JV expected the hub to be operational by February.

THE LOCAL COAL MARKET
Currently, there were about seven or eight similar beneficiation complexes on the market for sale,  an indication that the local coal market was facing further strain, but also owing to depleted reserves and aging infrastructure.

Nxumalo told Mining Weekly Online that the Inyanda complex was carefully chosen based on its mineral leases and the fact that Burgh had a number of coal reserves within a 10 km radius of the complex.

“Because of the poor market and the curveballs we have been swung in the export coal prices in recent days, we have to optimise and increase our coffers one way or another – by saving on logistics and saving on coal washing at the complex, instead of toll washing,” Burgh Group CEO Quinton van der Burgh said.

He added that the outlook was negative. “There are a lot of ups and downs in securing supply. The export markets are also down; prices are not great”.

Van der Burgh further pointed out that the “only way to succeed in the market” was having access to cheap coal, low strip ratios and good-quality coal. “Unfortunately for the larger companies, they don’t have the luxury . . . of manoeuvring around the market like emerging miners can,” he said.

However, he noted that the coal cycle would change and that, locally, coal would still be in demand for at least 20 more years.