UK firm enters SA coal industry

11 August 2008

UK-based London Mining has entered the local coal mining sector with a US$120-million (about R920-million) acquisition of a 50.5% stake in DMC Energy from local diversified exploration and mining company Delta Mining Consolidated (DMC).

“This acquisition will form the basis of London Mining’s new coal division, which we hope to grow rapidly in the future,” London Mining MD Christopher Brown said in a statement last week.

“We are particularly excited about entering into the coal business due to the strong demand from steel making and power generation that has resulted in major price increases this year, in a similar manner to iron ore.”

Following an internal reorganisation by DMC, Johannesburg-based DMC Energy will own 70% of Ashante Mineral Resource, which is based in Mpumalanga province, and 69.65% of DMC Coal, which operates in Limpopo province.

Access to infrastructure

According to the statement, Ashante Mineral Resource owns the Rietkuil coal project, which has an inferred in-situ resource of up to 288-million tonnes of coal, is situated just 13km from Eskom’s Kendal power station and 43km from the recently refurbished Grootvlei power station, and has access to rail, road and electricity infrastructure on site.

DMC Coal owns the Limpopo project, which has a potential of 426-million tonnes of metallurgical and thermal coal, and the Pixley Ka Seme coal and torbanite project.

That project includes a deposit in excess of 234-million tonnes of metallurgical coal, steam coal and anthracite, as well as 73-million tonnes of torbanite, a high-yielding oil shale with an estimated yield of one barrel of synthetic crude per tonne of shale.

“DMC Energy has also secured an irrevocable 40-metric-ton-per-annum port allocation through the future Porto du Bella Vista port in Mozambique, and is in the process of acquiring additional coal exploration assets in Botswana, Zimbabwe and Swaziland [from DMC],” the statement read.

“Rietkuil is being fast tracked into production and the other projects have substantial export potential through the new port in Mozambique,” Brown said. “This acquisition will add substantial value to London Mining.”

SAinfo reporter

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