June 26 (Bloomberg) -- Exxaro Resources Ltd. said it approved a new 3.8 billion-rand ($357 million) South African mine that will produce coal for export and to supply one of the state-owned power utility’s plants.
The Belfast project in the country’s coal-rich Mpumalanga province “encompasses one of the last high-quality reserves” in the region and “presents Exxaro with an opportunity for excellent returns,” the Pretoria-based company said in a statement today.
The mine’s estimated production is an average of 2.2 million metric tons of A-grade export coal a year and 500,000 tons of the fuel that will be burned for power by utility Eskom Holdings SOC Ltd., it said. The mine is forecast to start output in the second half of 2017, it said. About 3.6 billion rand of the approved spending will only take place one Exxaro gets the necessary licenses and regulatory approvals, it said.
Exxaro, which manages seven South African coal mines producing almost 40 million tons annually, currently supplies all the power-station coal it produces to Eskom, which relies on the fuel for 85 percent of generation and is struggling to meet demand in the continent’s second-biggest economy.
The first phase of its Thabametsi mine, next to its existing Grootegeluk operation in the Waterberg area of South Africa’s Limpopo province, will co-incide with the development of a 600-megawatt power plant being developed by France’s GDF Suez SA.
A bankable feasibility study for Thabametsi North Phase 1 will start in the third quarter and should be completed by mid-2015, it said. The project was first announced last year.
Exxaro may write off as much as 5.36 billion rand in its Mayoko iron-ore project in the Republic of Congo after it failed to conclude port and rail agreements, it said on June 24.
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