With the increasing demand for thermal coal that is used for power generation in countries such as India and China, large investments have been made in several coalfields in South Africa.

Mpumalanga has long been considered the coal basin of South Africa and still attracts investors, but the discovery of coalfields in Limpopo, such as those in the Waterberg area, has resulted in massive investments in the province.

While many coal mining projects are in full-scale production or in the construction phase, several projects, such as the Makhado coking coal project, have not progressed that far.

Makhado Coking Coal Project
Emerging developer and producer of high-quality thermal and coking coal Coal of Africa Limited (CoAL) confirmed on March 15 that the Makhado project, in Limpopo, could potentially produce hard coking coal. The company reported that the quality of the coal at Makhado met the hard coking coal specifications of international coking coal producers.

The definitive feasibility study (DFS) for the Makhado coking and thermal coal project was funded by CoAL and was upgraded after a six-month period ending December 31, 2012. The DFS was successful in providing greater operational certainty and reducing project risks. The findings of the DFS are to be released by the end of this month.

Progress has been made in the acquisition of properties required for the development of rail infrastructure and operations. At the time of going to print, CoAL had bought, or had the option to buy, the required properties for the rail load-out and rail spur for the project. However, negotiations for two properties, where the processing plant and initial opencast mine were to have been constructed, have not yet been concluded.

CoAL secured a bulk water supply for the Makhado project in the quarter ending December 2012 by signing a memorandum of agreement (MoA) with the Nzhelele farmers of the Makhado area concerning the more efficient use of water in the Nzhelele river catchment area.

The MoA has enabled the project to apply for an integrated water-use licence and has also resulted in the Nzhelele farmers relinquishing a portion of their water-use entitlements. However, the parties involved have agreed to work together and have formed a technical work group to replenish the relinquished allocation of water by the farmers.

CoAL has made significant progress on the regulatory requirements for the new-order mining rights application. South African mining legisla- tion requires CoAL to have a black economic-empowerment (BEE) shareholding before the Makhado project will be granted the necessary funding. No such member stakeholders have been announced yet.

It is predicted that once the modular plant-based first phase has been completed, one-million tons of saleable coking coal will be produced. Once the mine has reached full production, it is predicted that five-million tons of coking coal will be produced a year.

A R500-million capital investment is required for the project, while the projected costs of full-scale development are estimated at R2.7-billion.