BHP Billiton pumps money into SA

24 March 2006

Anglo-Australian resources giant BHP Billiton has announced plans to invest R4.4-billion (around US$700-million) in expanding two coal mines in South Africa, Business Report said on Friday.

Addressing the Coaltrans South Africa conference in Johannesburg on Thursday, Mohamed Seedat, president of the group’s energy coal division, announced a “very significant new investment … totalling several hundred million dollars” in its Douglas and Middelburg coal mines in Mpumalanga province.

According to Business Report, the mines are joint ventures between Xstrata (16%) and BHP Billiton’s local subsidiary, Ingwe Coal.

The project was still in the feasibility phase, Seedat said, but if given the green light, would help the company tap into growing global demand for the fossil fuel, and help South Africa to do “some catching up … on the export side.”

Boosting coal export capacity
Since 1995, SA’s coal exports had grown at a “very modest” 25%, Seedat said – while Indonesia’s had quadrupled, those of China and Colombia had tripled, and Russia’s had roughly doubled.

While global energy consumption grew 4.3% in 2005 – in volume terms the largest ever annual increase in consumption – Seedat noted a resurgence in the popularity of coal-fired power stations, driven by concerns over oil supply security, the relative economics of coal as a fuel and advances in clean coal technology and combustion efficiency.

“If the industry and governments can continue to work towards the effective implementation of clean coal technology, you could argue that the future never looked so bright for coal.”

Seedat said that “significant capital investment in mines and infrastructure” was needed to take advantage of this growth, adding that the planned expansion of the Richards Bay coal terminal set the scene for “significant growth of the country’s already large position as a supplier of thermal coal into the international markets.”

In December, the KwaZulu-Natal coal terminal announced plans to spend some R1-billion expanding its yearly export capacity to 92-million tons of coal by 2008, which would make it the biggest such facility in the world. reporter