Exxaro, which will be the major coal supplier to the Medupi power station via its Grootegeluk mine, says that it continues to engage with Eskom following the delay in the construction of the Medupi power station and the impact this is expected to have on the previously revised volume off-take agreement between the two parties.

Construction on the Grootegeluk Medupi Expansion Project (GMEP) to supply Eskom’s Medupi power station with 14.6 million tonnes per annum (mtpa) of coal is now 97% complete. The coal supply ramp-up began in 2013, with 1.3 million tonnes produced and 0.9 million tonnes dispatched to Matimba power station after industrial action affected the mine’s production in the first quarter of 2013. Further ramp-up and performance testing will be done in the first half of 2014 as per the revised contractual arrangement.

Total expenditure on the GMEP to date is R9.3 billion with total capital expenditure forecast at R10.2 billion.

Meanwhile, a bankable feasibility study on Thabametsi, a prospective greenfields opencast mine adjacent to Grootegeluk in the Waterberg, Limpopo province, is scheduled to begin in the second quarter of 2014 and to be completed in the first half of 2015. The mining right application process is under way and we anticipate that first coal production will be achieved by 2016/17, depending on the 600 MW Waterberg independent power producer and water supply development schedules.

Exxaro which is one of the major suppliers of coal to Eskom says that power station coal production from the tied mines was 1,263,000 tonnes (10%) lower for 2013 than for 2012. This was mainly as a result of lower production from Matla and Arnot (815,000 and 448,000 tonnes respectively) following unprotected industrial action in March 2013 as well as difficult geological conditions and management of safety risks at the underground operations.

The commercial mines’ power station coal production increased by 373,000 (2%) compared to 2012, mainly at Grootegeluk (347,000 t) due to higher demand from Matimba and the higher demand from the Mpumalanga power stations. Leeuwpan production increased by 75,000 t on improved yields, while North Block Complex (NBC) production was lower (49,000 t) in line with the contractual agreement with Eskom. Sales were 672,000 t higher mainly due to higher demand and availability of stock.

Exxaro says that its steam coal production for 2013 was 198,000 t (4%) lower mainly due to its NCC mine closure (298,000 t), the unprotected industrial action at Leeuwpan (115,000 t) and the longer-than-planned shut of the plant at Leeuwpan. Inyanda production increased (147,000 t) following higher plant feed and better yields due to geology, while Grootegeluk also increased (68,000 t) due to improved performance of the GG 4 and GG 5 plants. Domestic steam sales decreased by 176,000 t (5%) mainly due to lower sales at Leeuwpan after replacing an inland contract with an export contract. Lower sales were recorded at NCC and Inyanda due to the mine closure and prioritising export demand respectively, partly offset by higher sales at Grootegeluk on the back of higher demand. Steam coal export sales were 688,000 t (22%) higher mainly due to higher exports from most mines.

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