HomeEnergy MineralsVele production could start this year

Vele production could start this year

CoAL’s Vele project
in Limpopo province
Johannesburg, South Africa — MININGREVIEW.COM — 20 August 2010 – Emerging coal development and production company Coal of Africa Limited (CoAL) – listed on the AIM, the Australian Securities Exchange and the JSE – still expects to start production at its Vele colliery in South Africa this year, with talks over its environmental hazards proceeding positively.
CoAL revealed last week that it had halted some construction activities at Vele after a government order which said the company had contravened environmental laws, sending its shares down. The department directed CoAL to cease construction of some infrastructure that it said was in contravention of the country’s National Environmental Management Act. The infrastructure includes a storage facility and a sludge dam.

Now CoAL CEO John Wallington says discussions with government are proceeding well, and he expects some solution to the dispute within weeks.

“I would say Vele will still start this year and I am pretty confident that we will,” he said.

Vele was initially scheduled to start production in the third quarter of this year, and Wallington said it would ramp up to produce 1Mtpa over a six-month period.

The company said it had complied with the government’s regulations, and that it planned to put in place extra mitigation measures to minimise the project’s impact and assure the surrounding communities and environmental groups.

Several environmental groups had appealed to the mining ministry against granting of a new mining right for the Vele Colliery because of concerns that it might increase pollution at Mapungubwe, a World Heritage Site, located near the Kruger National Park.

Wallington does not foresee any major financial impact from the delays, but said CoAL may need to temporarily suspend some stuff working on the project’s construction to contain costs.

South Africa is one of the world’s top coal exporters, and the Vele colliery in the northern Limpopo province has an estimated resource of 813.5 Mt. CoAL plans to spend R3 billion on the project and to ramp up the mine over two phases to produce 5 Mtpa of saleable coking coal.