CAPE TOWN (miningweekly.com ) – Coal miner Wescoal has announced it will break ground on its greenfield project, in Moabsvelden, Mpumalanga, in February.

CEO Reginald Demana on Thursday said the mine would supply three-million tonnes a year of coal to Eskom’s Kusile power station.

Demana told the fifteenth annual Southern African Coal Conference, in Cape Town, that Wescoal would be one of the key suppliers to the Kusile power station over a ten-year period.

“We are very excited about this project, with the prospect of 300 new jobs [to be created] in the Delmas area.”

He said another exciting development was the Arnot mine, in Mpumalanga, which has a reserve of 190-million tonnes of coal.

Wescoal has acquired a 50% interest in the Arnot Mine from Exxaro Resources.

“It talks to the spirit of the Mining Charter III, with a new equity ownership arrangement with the participation of employees and communities,” Demana told Mining Weekly.

He said he considered it a landmark transaction in the empowerment space.

“We looked at what Mining Charter III was coming up with and structured it according to that. We think it's a landmark transaction in that sort of space. It shows what can be achieved.”

The mine will produce coal exclusively for the adjacent Eskom Arnot power station.

Demana said he considered Wescoal to be a reliable supplier to Eskom. “Our resources are predominantly [supplied to] Eskom. Sixty to seventy per cent is Eskom business,” said Demana, who noted that the company would continue to focus on the domestic market for now.

More broadly, he said coal mining companies needed to support the struggling State-owned power utility.

“We need a working Eskom that provides consistent and reliable supply. The coal story in South Africa is linked very much to the continued sustainable existence of Eskom. We have to talk about continued investment in coal and supporting Eskom.”

He said banks were still open to supporting coal companies.

“They are not going to fund new power plants, but as far as coal mining business goes, opening a new project or expanding one . . . they are still there to support us.”

However, he said securing bank funding was a long and complex process, particularly flowing from climate issues and environmental challenges.

“The process can be tiring and most companies in the junior space are not prepared for that. It requires a lot of work and compliance issues. You need to be prepared to go through the whole process.”

He said he expected larger companies to lead in developing and adopting new clean coal and other technologies, but that Wescoal, as a junior mining company, would be watching with interest.

“We look at technologies that get introduced. We look to the major companies to lead in that space, and we will follow what comes up in the market. We are watching this space. As tech gets rolled out, we will be beneficiaries of those in the forefront of that research and development.”