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Rio coal find could help Eskom
Feb 05 2008 09:59 AM

Johannesburg - Global resources giant Rio Tinto on Tuesday announced it has discovered an open-pittable coal resource of 1.04bn tonnes in the Limpopo Province. The coal is bituminous, and is suitable for generating electricity, it said.

The discovery at Chapudi came through Rio Tinto's coal exploration programme in the Limpopo (Soutpansberg) coal basin of SA, Rio Tinto said in a statement to the London Stock Exchange.

Rio Tinto and Kwezi Mining are currently investigating the feasibility and economics of establishing a mining operation to feed coal into a power station.

They are currently engaging with Eskom, and a number of independent power providers to this effect.

Exploration

The exploration work has been conducted in conjunction with Rio Tinto's BEE partner, Kwezi Mining. Exploration rights over the resource are held by two JV companies; Chapudi Coal Pty Ltd (Rio Tinto 70%) and Kwezi Mining Exploration Pty Ltd (Rio Tinto 49%).

Rio Tinto and Kwezi are continuing with exploration activities for thermal and coking coal east of the Chapudi project.

The chief executive of Rio Tinto Energy & Minerals, Preston Chiaro, said this is a significant find in an area that has previously been viewed as having little geological potential.

Power crisis

"The project's potential to produce thermal coal for electricity generation comes at a time when SA needs to rapidly increase its generating capacity. In addition, the basin offers the opportunity to produce a range of products, from thermal to hard coking coal for the export markets. We are currently planning the next phase of the project by beginning our pre- feasibility studies," he said.

The newly discovered Chapudi Resource lies within the Limpopo coal basin, in the northern part of SA. The coal is hosted in sediments of the Karoo Group, similar to other coalfields in Southern Africa. The coal seams at Chapudi occur in mudstones that can be correlated to the Upper Ecca formations of the Main Karoo basin.

Rio Tinto and Kwezi Mining began exploring for coal in the area in 2003, when the first borehole was drilled on the farm Chapudi. This borehole intersected significant thicknesses of coal. Since then, the Rio Tinto-Kwezi JV has drilled about 90 boreholes in the project area, and conducted geophysical surveys to aid the geological interpretation.

A total of 12 400 metres have been drilled to date.

The central part of the project now has sufficient drilling coverage to define a measured and indicated resource. The rest of the project area has been drilled to inferred resource status, it said.

Preliminary studies indicate that up to 40% of the coal may be recoverable for utilisation in a power station, it added.

"Significant potential for further resources exists in the area. Some of the potential occurs on ground that already belongs to the JV (and can be incorporated into the Chapudi resource by further drilling), whilst other potential is on ground currently under lease application," Rio said.

The coal has been demonstrated through test work to be suitable for combustion to generate electricity.