Coal of Africa Ltd., a producer of the fuel in South Africa, rose the most in almost two years in Johannesburg trading as its Vele project gained a water license, moving the company closer to resuming output halted in August.
The producer, based in Perth, Australia, jumped 87 cents, or 10 percent, to 9.70 rand, the biggest daily gain since May 22, 2009. It stopped construction work in August after the environment department said the site broke rules. The department in May voiced “significant concerns” about the mine, about 17 miles from the Mapungubwe Hill ruins, a United Nations World Heritage site and once southern Africa’s biggest settlement.
The award of the license takes Vele a “step closer” to becoming a fully operating mine, Heidi Sternberg, an analyst at Nedcor Securities, said by phone from Johannesburg today.
Coal of Africa, which applied for the license 17 months ago, plans to produce 5 million metric tons of coking coal a year at Vele, some of which will be used to fire blast furnaces at ArcelorMittal’s South African steel mills. A “rectification process” aimed at lifting the environment department’s compliance notice continues, Coal of Africa said today.
“We suspect that this is now only a matter of time,” said Charles Kernot, an analyst at Evolution Securities Ltd., in a note. Kernot recommends investors buy the stock.