The Vanggatfontein Colliery
Coal miner Wescoal has decided to put its Vanggatfontein Colliery on care and maintenance while it tries to secure an extension to a coal supply agreement (CSA) with power utility Eskom.
Wescoal acquired the mine, in Delmas, Mpumalanga, in 2017 as part of its buyout of Keaton Energy.
Coal produced from the mine has been supplied to Eskom under a ten-year CSA, which is due to expire on April 30; however, the energy component which is prescribed in gigajoules has been exhausted, with about 300 000 t of coal currently on stockpile at the mine.
Wescoal says it has had several engagements with Eskom regarding the extension of the CSA, which required that the entire Vanggatfontein resource be dedicated to the power utility.
"Unfortunately, discussions with Eskom on the CSA renewal, and their obligation to take up about 11-million tonnes of coal from Vanggatfontein, have not materialised as at the date of this announcement.
"Wescoal has, therefore, deemed it prudent to place the mine on care and maintenance as it is uncertain of how long Eskom will take to make a final decision. The above solution will save both overhead costs and capital expenditure," it notes.
Wescoal plans to continue to engage Eskom to find an amicable solution to the impasse in order to save jobs and the economy of Victor-Khanye municipality and other beneficiaries.
Vanggatfontein has a remaining life-of-mine of more than six years, with reserves of more than 15-million tonnes.
"The immediate plan regarding the run-of-mine stockpile is to process the coal and supply into the domestic and export market.
"Direct Wescoal employees working at the mine will be accommodated in various roles within the group, while management assesses alternative options and continues to engage with Eskom. The washing plants at Vanggatfontein will also be used to process coal from the Moabsvelden mine, thereby saving any additional capital requirements at Moabsvelden in the short term," the company says.