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Universal signs coal supply deal with Eskom

18th November 2016

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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Coal miner Universal Coal has signed a coal supply agreement with South African State-owned electricity provider Eskom that will enable openpit production from the New Clydesdale colliery (NCC), near Middelburg, in Mpumalanga, to start.

Universal will supply Eskom with 1.2-million tonnes of coal a year from the NCC over a period of seven years. The first coal will be delivered in the second quarter of the company's 2017 financial year.

Phase 1 underground mining at the NCC Diepspruit shaft started in September, and will deliver 0.9-million tonnes of run-of-mine (RoM) export-quality thermal coal a year. The Phase 2 openpit operation will add a further two-million tonnes of RoM production a year, taking Universal’s production profile to over six-million tonnes a year over two operations.

The

NCC is located about 70 km east of Universal's first mine, Kangala.

“The coal sales agreement [is finally delivering] on the full development of the NCC as the second operation of Universal Coal, an important step in the development of becoming a midtier mining company,” said CEO Tony Weber.

“Upon achieving steady state at the NCC, we will be producing saleable coal at a rate in excess of four-million tonnes a year, with excellent prospects for further organic growth.”

Trollope Mining Services has been nominated the preferred contractor for the openpit boxcut development, mining operations and infrastructure development. STA Coal Mining Company is responsible for underground mining.

Meanwhile, Universal has requested an extension to the date of delivery of the conditions precedent for its NCC debt facility, following a delay in securing a long-term coal sales agreement and the shift in phased development, switching first to underground and then to openpit mining.

The company said that it was reviewing all options available to finance the development, including reverting back to Investec Bank and approaching other interested institutions.

Edited by Mariaan Webb
Creamer Media Contract Publishing Editor

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