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Work stops at Vele

CoAL’s Vele coal
project in Limpopo
 
Johannesburg, South Africa — MININGREVIEW.COM — 12 August 2010 – Development work at Coal of Africa’s (CoAL) Vele coking coal project in Limpopo province has been put on hold while the company negotiates with the Department of Environmental Affairs (DEA).

The DEA has confirmed that it issued a compliance notice to CoAL last week to “cease with activities that are in contravention of the National Environmental Management Act”.

CoAL CEO John Wallington confirmed to Miningmx that all development work at the mine had been stopped for the past few days while management held discussions with the DEA.

Wallington had previously indicated in a Stock Exchange News Service statement that CoAL had met with the DEA, and that a further meeting had been scheduled for yesterday “to discuss in detail each of the concerns identified by the DEA”.

The DEA’s action follows last week’s interdict application against Vele by a group of environmental and conservation non-government organisations.

The root cause of the problem is that CoAL has gone ahead with development of the mine on the basis of being granted a new order mining right, but without having received the required integrated water licence from the DEA.

Queried about this in June, deputy chairperson Simon Farrell told Miningmx: “We expect to get the water permit within the next two weeks. The actions we are taking at the mine are within the conditions of the granting of the mining lease.”

Farrell has frequently complained over the past 18 months about the extended delays in getting the necessary permits for development of Vele.

Miningmx reports that the current situation is serious for the company because, if there is a further extended delay, CoAL may not be able to cover the costs of letting contractors and developers stand idle while it negotiates with the DEA.

It may well have to temporarily mothball development plans, which would boost costs and working capital requirements because of the knock-on delay on the first coal sales.

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