Name and Location
Vele colliery, Limpopo, South Africa.

Client
Coal of Africa Limited.

Project Description
The Vele colliery has the potential to produce five-million tons a year of coking coal, starting with one-million tons a year.

The colliery development will comprise two phases.

Phase 1 entailed the establishment of a modular coal treatment plant, capable of delivering about one-million saleable tons (yield dependent) of coking coal a year, with the capacity to double production should there be an increase in offtake agreements.

Phase 2 will deliver the planned full capacity of five-million tons of coking coal a year and the timing of the expansion will be subject to market conditions.

The mine will include both underground and opencast operations.

The project has an estimated 813.5-million gross tons in situ, with a life-of-mine expectancy of 32 years.

Value
The total capital expenditure to complete Phase 1 of the project was initially estimated at R350-million, but has since escalated to R450-million.

An additional R2.65-billion will be required to complete the second phase.

Duration
The project was expected to be in production early in the third quarter of 2010, but construction activities were statutorily halted in 2010/11, amid environmental concerns with the project’s development area.

The ramp-up to two-million tons a year is expected by 2016. A further ramp-up to five-million tons a year will be subject to prevailing market conditions.

Latest Developments
In the six months ended December 31, 2012, Vele continued to produce export grade thermal coal to offset costs, while the test trials on potential metallurgical coal are being concluded.

Vele produced 449 255 t of run-of-mine (RoM) coal and 438 501 t of coal was processed during the period, yielding 126 318 t of saleable export quality thermal coal.

The intended plant expansion at Vele will result in improved yields and operational efficiencies.

The plant expansion has been divided into two phases:
• Phase 1 entails the dewatering of the ultrafines product by installing filter presses, eliminating the need for the temporary slurry pond. It is scheduled for completion early in the second quarter of 2013.
• Phase 2 construction is expected to start in 2013 and be completed in the second half of 2014.

The approval of Vele Phase 2 by the board is subject to the completion of product testing currently under way. This phase includes the installation of a permanent RoM tip-and-crushing facility, a primary and middlings coal wash plant modules, as well as a fines recovery plant.

Production at Vele Colliery has been temporarily suspended following the derailment, primarily to reduce operating cash costs during this period and the lack of stockpile capacity.

Key Contracts and Suppliers
ELB and PBA Projects (PBAP − design and construction of the modular plant), DRA (design, construction and operation of the larger Vele coking coal wash plant); GRD Minproc (feasibility study, Phase 1 infrastructure engineering, procurement and construction management contract); MCC (opencast-mining contractor); Raubex (road construction); and ArcelorMittal South Africa (offtake agreement).

On Budget and on Time?
The project was ordered to cease operation on August 11, 2010, owing to a Department of Environmental Affairs directive.

Environmental authorisation has since been granted, with effect from July 5, 2011.

Meanwhile, additional charges, which were not included in the original budget, were incurred as a result of delays not only in receiving the initial grant of the new-order mining right, but also in executing it. Additional charges include standing time penalties and storage and transportation costs.

Further, some of the costs have increased since the original budget has been prepared.

This has increased the original value of the project by R100-million.

Contact Details for Project Information
CoAL general manager for Vele colliery, Mark Coetzee, tel +27 11 785 4518, fax +27 11 807 2161 or email markm@badgermining.co.za.
DRA International, Chiel van Niekerk, tel +27 11 202 8600 or email chiel@drasa.co.za.
ELB Group, tel +27 11 306 0700, fax +27 11 918 7208 or email dalenew@elbquip.co.za.
GRD Minproc, tel +27 11 514 0005 or fax +27 11 514 0006.
MCC opencast mining, Trevor Adams, tel +27 11 990 6600 or email boet@mccgroup.co.za.
PBAP, tel +27 21 948 8502, fax +27 21 948 8515 or email pbap@pbaprojects.co.za.
Raubex, Francois Diedrechsen, tel +27 12 665 3226, fax +27 12 665 2028 or email francois@raubex.co.za.