The South African coal mining landscape is transforming – and giving rise to the birth of junior, majority black-owned businesses with which Eskom has shown a preference to do business. Established in 2015, 100% black-owned junior miner Black Royalty Minerals (BRM), a subsidiary of the Makole Group (also 100% black-owned) is looking to maximize on the coal industry evolution and recently launched its first colliery (Chilwavhusiku colliery) – set to produce its first coal before the end of Q1, 2018, chairman of Makole Group NDAVHE MAREDA tells SASCHA SOLOMONS.

“This article first appeared in Mining Review Africa Issue 3 2018. Read the full digital magazine here or subscribe here to receive a print copy.”

According to Mareda, the vision for Chilwavhusiku colliery is to provide clients with a market leading quality product which forms the essence of the establishment of the operation.

The colliery is situated in Bronkhorstspruit, east of Pretoria. The area of the colliery is characterised by socio-economic challenges; however, the establishment of the colliery is anticipated to see significant community upliftment in the form of job opportunities and overall poverty alleviation.

He comments that Bronkhorstspruit was traditionally a farming community. When activity on site started in the area, BRM faced objections from the community and neighbours in the agricultural sector. “We have managed to resolve the issues amicably and have the backing of the community as the existence of the mine represents employment and economic opportunities for them,” he states.

Project progress

First coal was discovered in 2014 following exploration drilling work. From this point it took the company three years to commence with mining in November 2017.

Mareda notes that the Chilwavhusiku Colliery is the first and only project in the portfolio at present – and comprises one or two mining permits in the area. “We established site and started excavating the mine in the last quarter of 2017. The first box cut for the mine has been opened and the first blast occurred on 9 February 2018. While mining activity continues to progress, we continue to build the necessary supporting infrastructure which to date is more than 90% complete.”

“We anticipate producing first coal imminently and plan to produce 1 Mt of coal every year which we will supply to Eskom for power generation.” The project has a ten-year lifespan.

The following capital infrastructure is either completed or near completion at the colliery:

• Pollution control dam;
• Storm water pipeline;
• Stock pile platforms;
• Crushing and screening facilities; and
• Weighbridge.

Stefanutti Stocks is the appointed mining contractor, who is also building the capital infrastructure.

Community upliftment

Mareda points out that more than 90% of the employees at the mine are from the local community; and BRM has allocated 50% of the transportation of coal allocation to the local community.

“We implement local sourcing wherever possible. To support the youth of Bronkhorstspruit, we have also started a tertiary education bursary programme which includes two new students taken on board this year. We have further to this also developed a social and labour plan that we will implement throughout the life of the mine,” he notes.

“We see our employees and the community as key stakeholders to the success of our operation and we actively manage this engagement. The socioeconomic environment around mines needs to be addressed and mining companies must make positive socio economic development contributions.”

Future outlook

“BMR is pursuing other mining projects. Our plan is to grow the company to own and operate more than one coal asset and to also acquire and develop other minerals. We are also working on export opportunities,” notes Mareda. He puts forward that there is renewed optimism with the election of the new governing president and that there will be better direction in terms of policy and legislation affecting the industry. “We see opportunity for the South African economy to recover with the assistance of business friendly policy formulation and the mining industry will also benefit in that environment.”

BRM is optimistic about the future of coal as an input for energy generation locally and internationally as this helps sustain long-term demand. The Group has opened this mine with this view in mind and intends to expand its coal assets in order to participate in export markets.

Further, he notes that a constant risk in the mining industry is the volatility of commodity prices, which is why the company wants to diversify its resources and keep its operational costs to a minimum to maintain operations, even when the company experiences difficult or weak commodity cycles,” he comments.

“We are aware of the risks and challenges that face the industry and we still see opportunity in the sector. This will assist us in being more cautious when assessing new projects for investment,” he comments.

Mareda highlights a few challenges in the industry and ways of mitigating these challenges:

• Volatile commodity and exchange rate fluctuation – diversification of minerals and customers and a low-cost operating model;
• Policy uncertainty – better direction from government in resolving proposed legislative amendments and providing certainty for the sector and stability in key leadership roles within the government;
• Labour relations – active stakeholder engagement, contributing to economic development, thereby creating employment and contributing to reducing poverty;
• Liquidity and capital management – having facilities available, management and timing of cash flow, keeping operating costs low, and rigorous analysis of capital investment requirements.

Mareda explains that there are many opportunities in South Africa and within the industry. He adds that the industry is a key contributor to the economy and the value chain of other industries. “Investors should assess each opportunity for its viability and put risk mitigating plans in place to manage potential hazards involved with investments as they would when investing in other industries,” he notes.

Who is Makole Group?

The Makole Group is a South African 100% black-owned infrastructure, property development and mining group. The Group also has other businesses outside of property development and mining. The major companies of the Group are Makole Property Developments, MDP Consulting and Black Royalty Minerals. The Makole Group has delivered diverse quality multi-disciplinary property and infrastructure development projects in various sectors. We offer combined specialist construction skills through MDP Consulting and have vast experience in infrastructure planning, designs, project management and community participation. In 2018, the Makole Group launched Black Royalty Minerals, a mining company. Black Royalty Minerals currently operates the Chilwavhusiku Colliery in Bronkhorstspruit, east of Pretoria. The mining business is also working on a number of other projects in its quest to become a diversified South African mining company in key commodities. The other businesses of the Group include luxury brands and logistics.