Coal of Africa Says Mine Closing May Cost 500 Jobs

Coal of Africa Ltd. may lose 500 jobs at its Mooiplaats mine in South Africa if the company is forced to close down the operations because of environmental rules, Chief Executive Officer John Wallington said.

The Australian miner will be able to comply with the South African regulations “in time,” he said in an interview today, adding government communication on the issue is inconsistent.

“You don’t know where you are day-to-day,” Wallington said by phone. “We’ve been in constant talks with government since 2008 and that interaction is ongoing.”

Coal of Africa fell the most in more than two years in Johannesburg yesterday after saying it was given until Nov. 11 to comply with environmental regulations in South Africa or face the closing of Mooiplaats. An earlier article published by the Business Report newspaper had said the provincial government already ordered the temporary shuttering of the operation.

Mooiplaats “will in time meet all the requirements,” Wallington said, adding that Coal of Africa has invested about 1 billion rand ($147 million) into the project since 2008.

The Mooiplaats mine, in South Africa’s Mpumalanga province, began production in 2008 and is ramping up to produce 2 million metric tons a year, the company said on Oct. 28.

Coal of Africa, based in Perth, Australia, is also seeking to secure government approval to resume development of its Vele project in Limpopo province.

Vele Struggle

While South Africa’s Ministry of Mines has awarded the company a mining license for Vele, Coal of Africa has yet to receive a water-use permit. The Ministry of Environment and Water Affairs said in February it opposed the project because it was too close to a United Nations World Heritage site that was once southern Africa’s biggest settlement.

“The Vele issue has put Coal of Africa into the spotlight,” Wallington said. “We tend to get targeted more.”

The United Nations Educational, Scientific, and Cultural Organization “is visiting the site this month and after that we expect a decision,” he said.

In August, Coal of Africa ordered all workers to leave the coking coal construction site after the government declined to lift a suspension on development.

The company advanced 25 cents, or 3.1 percent, to 8.25 rand by the 5 p.m. close in Johannesburg. Coal of Africa fell as much as 21 percent yesterday.

ArcelorMittal, the world’s largest steelmaker, owns about 14 percent of the company, according to Bloomberg data.

To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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