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Nacala
Coal & Uranium  
27 November 2017

SA coal mine gets R4.3 billion life extension project

South African coal producer South32 has approved the R4.3 billion Klipspruit Life Extension project. 

The Klipspruit mine falls under the company’s South Africa Energy Coal business (SAEC).

Development activity is expected to commence in the current quarter with first coal expected from the open-cut operation in FY19.

“Approval of the R4.3 billion Klipspruit Life Extension project will secure the future of the colliery for at least another 20 years, ensure employment for 740 people and create 4 000 jobs during construction,” says South32 CEO Graham Kerr.

“The investment is expected to generate an internal rate of return (IRR) on investment of more than 20% by unlocking 616 Mt of resource at the Klipspruit South and Weltevreden deposits, and fulfilling around half of our current rail obligations with Transnet.”

Business restructured

South32 has also announced that it will manage its 92% owned South Africa Energy Coal business as a stand-alone business from April 2018, with plans to list the business on the JSE.

Once SAEC has been established as a stand-alone business and consistent with South32’s objective to further transform its South African operations, it will commence a process to broaden ownership of SAEC.

This will present opportunities for Broad-Based Black Economic Empowerment entities, employees and communities, and could lead to a listing of SAEC on the Johannesburg Stock Exchange.

SAEC will continue to be consolidated in the Group’s financial statements on a 100% basis until there is a change in control.

“Establishing South Africa Energy Coal as a stand-alone business will enable us to improve the operation’s competitiveness and ensure its on-going sustainability. This process will also allow us to further simplify our organisation and unlock additional value for shareholders,” says Kerr.

“We will also seek to increase the local ownership of South Africa Energy Coal, consistent with our commitment to South Africa’s economic transformation, and may ultimately list the business on the Johannesburg Stock Exchange.”

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