Company officials have acknowledged what they concede is a difficult choice. “This decision has not been taken lightly, but the need to preserve the company’s financial structure and ensure its future sustainability is paramount,” said Chairman David Brown.
The regulatory process begins at the outset of Q3 2013 involving a 60-day consultation period with stakeholder engagement, while addressing alternatives to maintenance. Mooiplaats currently employs 290 employees and 258 contractors.
CoAL bids to establish profitability at Mooiplaats, including capital investment, have faltered amid global thermal coal demand decreases—exacerbated, company officials said, by the colliery’s poor performance and challenging geological conditions.
To this end, Mooiplaats recorded a $16.6 million loss for the financial year ending Q2 2012 while generating an average $2 million monthly loss since Q1 2013. CoAL has a 3-million-metric ton allocation in Matola terminal in Maputo, the capital of Mozambique, and is working to mitigate the exposure. The company’s Q1 2013 cash position was $67 million.
It remains unclear how Mooiplaats could affect a country beset by mining worker unrest and a volatile political atmosphere.