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Wescoal secures long-term coal export business

Wescoal CEO Waheed Sulaiman

Wescoal CEO Waheed Sulaiman

Photo by Duane Daws

28th September 2016

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Coal mining and marketing company Wescoal has finalised a series of coal contracts in line with its stated intention of supplying a million tonnes of coal a year into the export market.

The coal purchase confirmations, which involve the supply of more than five-million tonnes of coal from November this year to April 2021, underpin the revenue diversification strategy of the JSE-listed company, headed by CEO Waheed Sulaiman.

They also provide cash-flow certainty into the future for Wescoal, which has up to now been 80% reliant on coal sales to State electricity utility Eskom.

In the next five to eight years, Sulaiman – a former BHP Billiton strategy and business development employee – is planning to grow Wescoal’s run-of-mine production to eight-million tonnes of coal a year, from three-million tonnes currently.

On the organic growth front, Wescoal’s Elandspruit flagship mine is on the way to producing at a rate of two-million tonnes of coal a year, with its Intibane and Khanyisa collieries together set to provide another one-million tonnes a year.

In the 12 months to March 31, the company produced 2.8-million tonnes of coal and recorded 78.8%-higher after-tax profit of R51.8-million on a better-quality debtor book, increased productivity and cost cuts.

Wescoal said in a cautionary in August that it had entered negotiations to increase its black economic empowerment (BEE) ownership and drew attention to the long-term coal supply agreement it had entered into with Eskom, which required it to increase its BEE ownership to more than 50% by end December 2016.

The company, which mines, processes, sells and supplies coal to clients in the power generation, manufacturing and petrochemicals sectors, also has acquisition targets in its sights.

Edited by Creamer Media Reporter

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