Wescoal has decided to put its Vanggatfontein Colliery on care and maintenance while it tries to secure an extension to a coal supply agreement (CSA) with power utility Eskom.
Wescoal acquired the mine, in Delmas, Mpumalanga, in 2017 as part of its buyout of Keaton Energy.
Coal produced from the mine has been supplied to Eskom under a 10-year CSA, which is due to expire on April 30. However, the energy component, which is prescribed in gigajoules has been exhausted, with approximately 300,000 metric tons (mt) of coal currently on stockpile at the mine.
Wescoal said it has had several engagements with Eskom regarding the extension of the CSA, which required that the entire Vanggatfontein resource be dedicated to the power utility.
“Unfortunately, discussions with Eskom on the CSA renewal, and their obligation to take up about 11 million mt of coal from Vanggatfontein, have not materialized as at the date of this announcement,” it noted. “Wescoal has, therefore, deemed it prudent to place the mine on care and maintenance as it is uncertain of how long Eskom will take to make a final decision. The above solution will save both overhead costs and capital expenditure.”
Vanggatfontein has a remaining life-of-mine of more than six years, with reserves of more than 15 million mt.
