Black-empowered Sekoko Coal has signed an offtake memorandum of understanding (MoU) with State-owned power utility Eskom to supply coal to the Matimba power station, in Limpopo.
The South Africa-based energy and minerals company says that it would supply the coal from its Waterberg project, which it owns in a joint venture (JV) with Australia-based exploration and development company Firestone Energy.
<p>The key aspects of the agreement include a six-year term from the start of first coal production, which is expected by April 2012, while negotiations can lead to a longer-term contract extension from 2018 to 2032.
The MoU further stipulates that the Sekoko JV will deliver coal quantities based on Eskom’s excess coal requirements and burn plan, as applicable from time to time, and in line with the contract coal supply schedule.
Executive chairperson Timothy Tebeila says that the development with Eskom puts the Sekoko JV in an advantageous position, as it can now also proceed with the development of phase two of the Lephalale-based Waterberg coal project and procuring the necessary financing.
“The MoU marks the largest commitment Eskom has made to an emerging black-owned Limpopo-based junior coal-mining company at the Matimba power station, clearly indicating that Eskom is serious about introducing a second coal supplier in the Waterberg district’s Lephalale area,” he notes.
The supply contract offers Sekoko Coal and Firestone Energy an opportunity to maximise value for their product, as well as to establish a record for reliable, high-quality coal production. Production at the Waterberg coal project will start at about 43 000 t/m in April 2012, from an openpit, ramping up to 83 000 t/m by April 2015.
The coal produced from this project will be of a product mix quality, and is in high demand from steel manufacturers around the world as it is the preferred feedstock for use in coal-fired power stations, steelmaking and high-end custom coke manufacture.
The project comprises eight farms in the Waterberg coalfield totalling some 7,8 ha, and entails the construction of an opencast coal mine on the Smitspan farm.
The definitive feasibility study shows that the farm contains sufficient coal to produce around 120-million tons of coal for power stations, with some of the higher-grade coal suitable for the metallurgical and the thermal export markets.
Meanwhile, Firestone has appointed David Perkins its chairperson to succeed John Dreyer, who has stepped down.
The company also recently appointed two new South Africa-based nonexecutive directors to serve as representatives of Sekoko.
It is expected that the replacements will help take Firestone to the implementation phase of the Waterberg coal project.