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HCI SET TO RAMP UP COAL OPERATION WITH SECOND MINE

02 Oct Mining

EMPOWERMENT investment group Hosken Consolidated Investments (HCI) — best known for its gaming and media interests — looks set to scour a rich seam in the coal sector with a second mine starting production this year.

HCI’s coal-mining operations have mainly been concentrated on the Palesa Colliery with hitches in processing various regulatory steps delaying the start-up of production at its Mbali Colliery.

In HCI’s annual report released on Tuesday, CEO Johnny Copelyn said all the necessary approvals had been received for Mbali and all the ancillary infrastructure to the wash-plant had been completed on budget. “This mine will produce coal suitable for the export and local markets.”

Mr Copelyn inferred that the combined production from its Palesa and Mbali coal mines — both in Mpumalanga — should yield significant profits.

He said the past financial year had already produced solid results from operations at Palesa, and that the proceeds were all reinvested in developing the Mbali mine.

“Our section 11 transfer of the rights to Mbali has now been granted and we are ready to start mining at this second site, which should see significant profit from the combined production starting to be available to the group going forward.”

In the year to end-March HCI’s coal operations accounted for 7.3% of group turnover and about 6% of profits. The annual report showed HCI’s coal interests generating revenue of R556m and an encouraging R86m in earnings before interest, tax, depreciation and amortisation.

Mr Copelyn said the Palesa Colliery achieved sales of 1.93-million tonnes. He said HCI, which has strong trade union connections, had also reached agreement with the National Union of Mineworkers (NUM) for wage increases for the next three years at Palesa.

Mr Copelyn said the agreement with NUM was concluded with negligible disruption to production.

Palesa might also receive a further boost with the mining right application on the Rooipoort property (which is contiguous to Palesa) granted by Department of Mineral Resources. Mr Copelyn said this approval would increase the Palesa resource by 32-million tonnes of probable resource. He said Palesa Colliery was conducting trials to produce a higher calorific value product in addition to its current contracted production.

“If successful this will increase sales by approximately 300,000 tonnes per annum.”

Although Palesa’s profitable mining endeavours and Mbali’s shift into production will please HCI shareholders, the approval of the Nokuhle mining right has still not been received. Mr Copelyn said management was optimistic this right would be granted in the near future.

Source: BDLive – Marc Hasensfuss