JOHANNESBURG (miningweekly.com) – Aim-, ASX- and JSE-listed Coal of Africa Limited (CoAL) expected production at its Vele colliery to resume in the first week of February after extensive flooding two weeks ago halted operations.

CEO John Wallington said on Friday that the group had restarted limited operations at the Limpopo-based coal mine, where 500 mm of rainfall over a five-day period in January had been recorded.

The miner said on January 21, as it ceased operations, that normal operations were expected to resume within seven days – subject to receding rainfall.

Meanwhile, Vele’s planned plant expansion, which would enable the simultaneous production of both export-grade thermal coal and Eskom middlings products, while increasing qualities and yields, had been divided into two phases and would be completed by year-end.

Phase 1, which included the installation of filter presses to allow for the dewatering of the ultrafines product and eliminating the need for the temporary slurry pond, was expected to be completed by the first quarter of the 2013 calendar year.

Phase 2, comprising the installation of a permanent front-end crushing facility and a dual-product thermal and coking coal plant module, would be completed by the second half of the year.

The expansion project would be funded through a large portion of Haohua Energy International's (HEI's) $100-million investment.

CoAL on Friday received the remaining $80-million from HEI.

The coal miner reported on January 9 that HEI would subscribe for $100-million of CoAL’s shares to give it a 23.6% stake in the mining house. The first $20-million was transferred to CoAL in January.

PRODUCTION
CoAL produced 718 448 t of saleable coal during the three months to December, down from the 954 876 t produced in the prior quarter, as strike action and scheduled festive-season closures impacted on output.

The Vele colliery recorded saleable coal output of 53 993 t, compared with the September quarter’s production of 72 325 t.

A six-week strike at the company’s Mooiplaats colliery, in Ermelo, resulted in production falling from 199 578 t in the first quarter, to 70 656 t in the second quarter.

The fall in production led to a 17.8% drop in sales to the domestic market, which fell to 154 186 t in the December quarter, from 187 499 t in the prior quarter.

CoAL, which had initiated a Section 189 process during the quarter, aimed to examine various strategic restructuring alternatives including partnerships or disposal.

The group was also expected to cut about 274 jobs at its Woestalleen complex, in the Witbank coalfield, as coal reserves at the Vuna colliery were expected to be depleted by March, cutting run-of-mine supply to the Woestalleen complex processing facility.

Wallington commented that several options for the complex, including possible disposal or closure, were being considered.

The company initiated Section 189 processes at the operation, which produced 593 799 t of saleable coal during the second quarter, down from 682 973 t in the first quarter.

Meanwhile, CoAL reported that sales during the period under review had reached 829 647 t, up from 621 456 t in the prior quarter.

CoAL’s export-quality coal inventory had been cut by the end of the quarter, from 327 156 t in the first quarter to 152 362 t.