Firestone says first stage of Waterberg project is to develop Smitspan mine, also Vetleegte mine a metallurgical coal deposit
July23, 2011
By Siseko Njobeni, Business Day
THE state-owned Industrial Development Corporation (IDC) has started funding a coal project in Waterberg in Limpopo, JSE-listed Firestone , a partner in the project, said yesterday.
The IDC had approved the first drawdown of the funding facility by Firestone’s partner in the coal project, Sekoko Resources, for mine development costs.
Sekoko is a black-owned energy and minerals company developing the coal, as well as magnetite iron ore and platinum group metals projects in Limpopo.
"The IDC is now a confirmed strategic partner in the Waterberg project. The commencement of this funding represents the first step in our final phase of bringing our Waterberg coal project into production," Firestone chairman David Perkins said yesterday. Coal production is scheduled to commence next year.
In a statement issued yesterday, the IDC said the Waterberg project had economic merit and the potential to become a sustainable and profitable venture for all stakeholders.
"While it is still in its infancy stage, the IDC believes that the Waterberg area will be a key region for the future of the South African coal industry. This investment allows the IDC to establish an early footprint in the region.
"The project is positive in terms of regional development as it is expected to create new jobs and stimulate economic activity in Limpopo," the IDC said.
The IDC said the project would also ensure the long-term security of coal resources to support Eskom’s electricity generation programme.
Sekoko signed a memorandum of understanding with Eskom earlier this year. The project will supply 525000 tons a year for three years from April next year, and thereafter 1-million tons of coal a year for three years from April 2015 to March 2018 to Eskom’s nearby Matimba power station.
The joint venture is conducting further discussions with Eskom in connection with the supply of further tonnage to power stations other than Matimba.
Eskom’s other power station in the area is the 4800MW Medupi power station, which is under construction.
Firestone said the first stage of the Waterberg project was to develop the Smitspan mine, "which has a substantial measured thermal-coal resource, and to develop the Vetleegte mine, which is a substantial metallurgical coal deposit".
The IDC’s interest in the Waterberg project is through a 33,3% equity interest in Sekoko Waterberg Colliery, a special purpose vehicle.
Sekoko Resources holds the remaining 67% in Sekoko Waterberg Colliery.
Sekoko Waterberg Colliery has a 40% interest in the Waterberg project and Firestone holds the other 60%. Sekoko Waterberg Colliery also owns 800-million Firestone shares and this pushes Sekoko Waterberg Colliery’s effective interest in the project to about 58%.
The IDC said yesterday it would pay about R190m for its 33% interest in Sekoko Waterberg Colliery, "to be used for project-development costs, as well as to cover any funding shortfalls".
Sekoko’s Waterberg coal reserves are located on eight farms in an area of almost 8000 ha. According to Sekoko, when in full production, Waterberg will produce about 3-million tons a year of washed export-grade coking coal, destined principally for China and India.
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July23, 2011
By Siseko Njobeni, Business Day
THE state-owned Industrial Development Corporation (IDC) has started funding a coal project in Waterberg in Limpopo, JSE-listed Firestone , a partner in the project, said yesterday.
The IDC had approved the first drawdown of the funding facility by Firestone’s partner in the coal project, Sekoko Resources, for mine development costs.
Sekoko is a black-owned energy and minerals company developing the coal, as well as magnetite iron ore and platinum group metals projects in Limpopo.
"The IDC is now a confirmed strategic partner in the Waterberg project. The commencement of this funding represents the first step in our final phase of bringing our Waterberg coal project into production," Firestone chairman David Perkins said yesterday. Coal production is scheduled to commence next year.
In a statement issued yesterday, the IDC said the Waterberg project had economic merit and the potential to become a sustainable and profitable venture for all stakeholders.
"While it is still in its infancy stage, the IDC believes that the Waterberg area will be a key region for the future of the South African coal industry. This investment allows the IDC to establish an early footprint in the region.
"The project is positive in terms of regional development as it is expected to create new jobs and stimulate economic activity in Limpopo," the IDC said.
The IDC said the project would also ensure the long-term security of coal resources to support Eskom’s electricity generation programme.
Sekoko signed a memorandum of understanding with Eskom earlier this year. The project will supply 525000 tons a year for three years from April next year, and thereafter 1-million tons of coal a year for three years from April 2015 to March 2018 to Eskom’s nearby Matimba power station.
The joint venture is conducting further discussions with Eskom in connection with the supply of further tonnage to power stations other than Matimba.
Eskom’s other power station in the area is the 4800MW Medupi power station, which is under construction.
Firestone said the first stage of the Waterberg project was to develop the Smitspan mine, "which has a substantial measured thermal-coal resource, and to develop the Vetleegte mine, which is a substantial metallurgical coal deposit".
The IDC’s interest in the Waterberg project is through a 33,3% equity interest in Sekoko Waterberg Colliery, a special purpose vehicle.
Sekoko Resources holds the remaining 67% in Sekoko Waterberg Colliery.
Sekoko Waterberg Colliery has a 40% interest in the Waterberg project and Firestone holds the other 60%. Sekoko Waterberg Colliery also owns 800-million Firestone shares and this pushes Sekoko Waterberg Colliery’s effective interest in the project to about 58%.
The IDC said yesterday it would pay about R190m for its 33% interest in Sekoko Waterberg Colliery, "to be used for project-development costs, as well as to cover any funding shortfalls".
Sekoko’s Waterberg coal reserves are located on eight farms in an area of almost 8000 ha. According to Sekoko, when in full production, Waterberg will produce about 3-million tons a year of washed export-grade coking coal, destined principally for China and India.
Read more
Why Coal Prices Will Soar in the Coming Years
Lontoh Coal Limited of South Africa has planned to open up China’s market
Coal prices area at US$ 120 a tonne
Mozambi Coal to acquire Mozambican coal concession
Newcastle steam coal price rises by 1pct
S.Africa's June coal exports rise to 4.78 mln T
Coal of Africa shares up almost 20%
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