Modern Mining: Featured News

With its flagship Elandspruit mine now a mature operation and performing well and the acquisition of Keaton Energy under its belt, JSE-listed Wescoal has emerged as one of the most significant players in the junior/mid-tier coal mining sector. Modern Mining’s Arthur Tassell recently spoke to Wescoal’s CEO, Waheed Sulaiman, in Johannesburg about the company’s strategy and achievements and followed up with a visit to Elandspruit and the Wescoal Processing Plant, both in the Middelburg area of Mpumalanga.

Sulaiman, who has been at the helm of Wescoal since early 2015 (first as interim CEO and then, from April 2016, as CEO), has presided over a period of growth and profitability for the company, which in FY 2017 recorded revenues of R2,1 billion and an operating profit of R213 million. “We have a five-year growth average of 115 per cent per annum and, for the past two years, we’ve also being paying dividends,” he says. “We’re approaching our medium-term objective of producing 8 Mt/a ROM but we still have an appetite to grow and to diversify into new markets.”

Wescoal Mining 2

Mining contractor IPP has deployed a fleet at Elandspruit consisting primarily of 40-ton capacity Bell ADTs, 100-ton capacity Komatsu rigid trucks and Hitachi excavators.

While Wescoal’s origins lie in coal trading (it was incorporated in 1996 under the Chandler name to purchase the coal trading business and other assets of the Chandler family), the mining division is today the bigger part of the company, accounting for 64 % of revenues and 89 % of operating profits. The trading division nevertheless remains an important contributor to Wescoal and ranks as one of the leading coal distributors in South Africa.

Wescoal’s entry to mining dates back to 2009 when it started mining at Khanyisa near Kendal, adding a second mine, Intibane near Ogies, to its portfolio in 2013. The real breakthrough for Wescoal, however, in establishing its credentials as a serious player in the coal space was the development of Elandspruit, a greenfield project, within a matter of months for a capital cost of around R250 million.

“Elandspruit, which is a far bigger operation than either Khanyisa or Intibane, gave us scale and sustainability, with its ability to produce at up to 3 Mt/a ROM and its long life of between 12 and 15 years,” says Sulaiman. “With the Keaton acquisition, we now have a second large operation in the form of Vanggatfontein, near Delmas, which is similar in size to Elandspruit and which has a remaining life of around 15 years.”

Vanggatfontein, which started operations in 2010, is currently producing at a rate of approximately 3 Mt/a and has been successfully integrated into the Wescoal group with the change of control being effected without interruption to operations or production. Mining is undertaken on a contract basis by Liviero Mining. The coal is treated in two plants – a 500 t/h 2- and 4-Seam plant, which produces thermal coal for Eskom, and a 100 t/h 5‑Seam plant, which has in the past been used to toll treat external material and also produce metallurgical coal.

One of the assets forming part of the Keaton deal is Moabsvelden, which is adjacent to the Vanggatfontein property. With a 47,8 Mt resource, it has the potential to be developed into a 1,5 to 2 Mt/a ROM operation. “Moabsvelden is fully permitted and there is capacity for the coal it produces to be washed using the processing facilities at Vanggatfontein,” states Sulaiman. “So essentially we’re talking about a low-capex development – probably under R200 million – which could be put into production within a very short time frame.

“We’re currently very advanced with our own studies on the project in preparation for an investment decision. Keaton was looking at an entirely opencast mine but we are examining whether underground mining or a combination of underground and opencast might be a better option.”

With Vanggatfontein now in the mix, Wescoal is currently producing at an annualised rate of over 7 Mt/a ROM. Once Moabsvelden comes on stream, this figure could easily exceed the 8 Mt/a target.

Looking at achievements over the recent past, Sulaiman says that in addition to the operationalisation of Elandspruit and the Keaton acquisition, a BEE transaction – which he describes as “a significant step in Wescoal’s journey” – has been concluded. This not only guarantees a black shareholding of more than 50 % over a five-year period but has also resulted in the injection of around R176 million in new equity into the business. “Our BEE credentials now meet the very exacting requirements of Eskom, which is our single biggest customer,” he says.

Wescoal prides itself on running tight, efficient operations and Modern Mining was able to judge this for itself on a recent media tour of the Elandspruit mine and the Wescoal Processing Plant. Elandspruit is located 8 km west of Middelburg while the plant is approximately 20 km south of the town. The tour group was accompanied by senior executives of Wescoal, including Izak van der Walt (CFO), Thivha Tshithavhane (CEO Mining), Bongani Hlope (Head HR) and Elandspruit GM Baat Leonard.

When Modern Mining was last on site at Elandspruit in early 2016, the mine was still ramping up and the mining contractor was Diesel Power. Today Elandspruit has reached – and indeed is exceeding – its steady-state production level with multiple faces active to allow for synchronised mining activities. There is also a new mining contractor – eMalahleni-based IPP Mining & Materials Handling – in place, which is consistently hitting its monthly targets. The opencast production is supplemented by a small underground section which utilises a single continuous miner. Current monthly production is running at between 250 000 and 260 000 tonnes of ROM, with the opencast operation being responsible for about 220 000 tonnes monthly.

The mine exploits all five seams of the Witbank coalfield, which extend to a maximum depth of 70 m below surface, are near horizontal in formation and devoid of geological complexities. The seams are mined selectively with IPP deploying a fleet consisting primarily of 40-ton capacity Bell ADTs, 100-ton capacity Komatsu rigid trucks and Hitachi excavators.

Tshithavhane noted that synergies with its neighbours have allowed the mine to open additional opencast mining faces and have also expedited the opening of the underground section, which is accessed via an adit on a neighbouring property.

Elandspruit’s production is trucked to the Wescoal Processing Plant for washing. This facility was originally built around eight years ago by Muhanga Mines and was purchased by Wescoal in 2014 at a very competitive price for a fully permitted and operational facility. It is continually being upgraded to meet customers’ product quality and quantity requirements and recently a radial stacker conveyor designed to stockpile finished product destined for Eskom was installed. Total feed capacity of the plant is in the region of 200 000 tonnes per month.

The complex consists of a crushing section and drum/cyclone and fines treatment plants that can produce a range of products to meet the demands of Eskom, other domestic consumers and the export market. The main drum/cyclone plant is operated on behalf of Wescoal by Pentalin Processing under the direction of Jaap Kruger, Wescoal’s Processing Manager.

With Elandspruit’s production now close to exceeding the processing plant’s capacity, Wescoal has entered into an agreement with one of Elandspruit’s neighbours which will see some of Elandsfontein’s coal being treated on a toll basis. Essentially, the arrangement has boosted Wescoal’s treatment capacity without the need for any capital expenditure.

In step with its emergence as a mid-tier coal miner, Wescoal has put in place vigorous enterprise and infrastructure development programmes designed to cement its ties with local communities, as Bongani Hlope explained to the journalists visiting Elandspruit and the processing complex. These include a sewing/textile project, in which Wescoal has already invested R1 million and which is already supplying PPE clothing to Elandspruit and other mines; a bakery, scheduled for start-up later this year; a housing project for pensioners and disabled community members which is ongoing and which has already seen 15 houses constructed since 2015; and the upgrading of ablution blocks at four schools.

A major infrastructure project has been the diversion and upgrading of the D20 road near Elandspruit. This was completed in May last year and involved an investment by Wescoal of over R30 million. The company has taken over responsibility for the maintenance of the road till mine closure, at which point it will be donated to local government.

These efforts are all part of Wescoal’s goal of achieving sustainability. As Sulaiman says, “Sustainability is about more than just ensuring that we have the coal resources and a pipeline of projects to sustain operations well into the future. It’s also about ensuring that our host communities benefit from our activities. This is a cornerstone of our strategy and we believe we have already achieved a great deal with much more to come.”

Contact Modern Mining

Title: Editor
Name: Arthur Tassell
Email: mining@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Bennie Venter
Email: benniev@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

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