South Africa Coal Mining Holdings (SACMH), the mining company controlled by Mumbai-listed JSW Energy, has made solid progress in ramping up production.
SACMH’s interim results for the six months to end June, released on Friday, showed monthly runoff-mine production increasing almost six fold — from 13,400 tonnes per month to around 77,000 tonnes — from open-cast and underground mining activities.
The production ramp is encouraging since SACMH only emerged from a dormant state in 2010 when JSW emerged as the company’s new anchor shareholder. Since successfully bidding for a major share in SACMH, JSW has advanced $19m to fund the start-up of operations earlier this year.
Operations had been placed on care and maintenance in early 2009 after various operational setbacks.
While the production profile looks promising the company still showed a R187m loss from turnover of R174m with CEO Anthony Rayment reporting high strip ratios and difficulties with the underlying geology continued to hamper mining activities. He said this resulted in higher cost per ton and lower run-of-mine volumes than originally anticipated.
SACMH reported that 139,500 tonnes of coal were produced in the interim period with an average yield of 52 per cent. SACMH sold over 200,000 tons on the export market, which accounted for R171 million of the R174 million revenue generated in the interim period.
Rayment also expressed concern about a reduction in the company’s rail allocation to the Richards Bay Coal Terminal (RBCT) in terms of the Quattro allocation scheme, which was reduced from 207,000 tons to 157,000 tons.
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He said SACMH had made representations to the Department of Minerals and Resources around the matter.
“The impact of reducing allocation at this stage of the company’s life is effectively to significantly constrain future export potential and concomitant profitability.”
Rayment said production in excess of the RBCT’s Quattro allocation scheme was being shipped through an alternative export channel.