[miningmx.com] -- SASOL’S coal mining activities have generally been restricted to supplying its Secunda coal-to-liquids (CTL) plant. However, the failure to press ahead with the R60bn, 80,000 barrels-per-day Mafutha CTL project in the Limpopo Province last year has given both Sasol and its 51% joint venture partner in the project, Exxaro Resources, food for thought on what to do with the coal resources on which Mafutha was premised. Sasol is not prepared to say much about its plans; not even provide a peak at just how much coal on which it, and Exxaro, sits in an area dubbed Limpopo West. It is worth recalling, however, that former Sasol executive director Benny Mokaba said in 2008 that the coal field that would supply the Mafutha CTL was “vast”. Jacqui O’Sullivan, GM of Group Communication at Sasol, confirms that the group’s Sasol Mining applied for a mining right with the minerals resources department. “We anticipate a decision on the allocation of the mining right will take about a year,” she says. The joint venture already holds a prospecting right. “Should the mining right application be successful and a mining right is granted, Sasol will then have to commence mining operations within one year,” O’Sullivan said. The mine would be open-cast, requiring of significant washing or beneficiation and would supply both Eskom as well as the export market. So while Sasol – and Exxaro for that matter – remains coy on the kind of potential investment in the mine, it’s a question of simple arithmetic to suppose that for a mine to be worth undertaking, and on a 49:51 basis it would have to have considerable scale, eventually. The export coal markets are currently depressed but it could represent an interesting new revenue line for Sasol and provide valuable supply to Eskom, which has identified a 40Mt supply deficit by 2019. Infrastructure remains a limiting factor, however. Sasol owns 5% of Richards Bay Coal Terminal, the facility that handles exports. At an expanded level of 91 million tonnes year (Mtpa), this is about 4.5Mt. Sasol already exports about 2Mtpa to 3Mtpa, depending. There are also questions of rail capacity out of the Waterberg, which is in the Limpopo Province. “Due to infrastructure constraints, specifically related to the availability of rail capacity and water, the initial production volume is anticipated to be low,” says O’Sullivan. Still, this is definitely one for the future.
RES Price at posting:
30.5¢ Sentiment: None Disclosure: Not Held
