Chairperson's View | Edition 005

2020 to See Canyon Coal Achieving Major Status

This is going to be an exciting year for Canyon Coal as we are on track to reach 15 million tons of run of mine coal production, which will elevate the group into the category of a major coal mining house. This is a significant milestone in our company history as an inclusive, growth-orientated entity. We are proud to have built this company to this level of growth.

And we are not done yet by any means; our next target is to achieve over 20 million tons of run of mine coal production by the end of 2021.

However, before we delve into the plans for the next couple of years, let me briefly reflect on 2019. We overcame significant market challenges largely in relation to the low export coal price – which still remains a challenge – with financial prudency and efficiency enhancement strategies. We will maintain these to ensure the financial sustainability of all our operations.

In 2019, we successfully ramped up production at our Khanye colliery, in Bronkhorstspruit, Gauteng to 2.4 million tons of coal a year. The operation employs 400 people. We also started mining at the Phalanndwa Colliery Extension Project located near Delmas, in Mpumalanga, which will produce an average of 1 440 000 tons a year of coal at steady state and employs about 200 people.

It is notable that we invested approximately R1 billion between Khanye and the Phalanndwa Extension into the development of these new projects, which comes at a time when new investment in coal project developments is highly challenging.

Returning to our goals for 2020, once we have received all the necessary authorisations, we aim to develop the De Wittekrans project located south of Hendrina, Mpumalanga and the Palmietkuilen project which is located near Springs in Gauteng.

Around R600-million will be invested in De Wittekrans which will be both an opencast and underground mine with an estimated life of mine of approximately 24 years based on a run-of-mine production of approximately 300 000 ton a month. We aim to start production of run of mine coal at De Wittekrans during the second quarter of this year and will employ around 400 people.

Palmietkuilen will cost around R1.5 billion to develop and create about 800 jobs. It will be an opencast mine producing 600 000 tons a month of coal at steady state production with a life of mine of about 22 years. We aim to have the mine in production by the fourth quarter of this year.

Once these mines are up and running, we will begin the R500 million development of the Witfontein underground mine which is located north west of Bethal, in Mpumalanga and R1.5 billion Springfield project which is situated in Vereeniging, Gauteng to be ready to commence in 2021. We have already done all preliminary work on these projects. This will allow us time to receive all outstanding licences, authorisations and develop the required mine infrastructure. Additionally, in 2021 we will begin developing the Birmingham project near Hendrina, in Mpumalanga. Moreover, Hakhano Colliery’s – the group’s first opencast mine – processing plant will be restarted in mid-2021 once a new nearby mining project receives the required licenses.

We continue to invest in new and existing projects to create jobs and procurement opportunities for local communities. Other associated benefits include the internships, community development projects, business development initiatives, bursaries and learnerships that are offered as part of our social and labour plan (SLP) and local economic development (LED) requirements. These all tie in to support the government’s efforts to grow the economy and improve the quality of living and education standards of local community members.

Our projects are being developed with the intent to provide Eskom with the right quality coal at a competitive price depending on its needs. We believe that if we supply Eskom coal at the right price, this will support economic growth of the country because Eskom is the economic engine and if Eskom fails it is the South African people that suffer the most.

We look forward to working with our colleagues, community members, union representatives and all other stakeholders as we continue to grow and develop the group in the interests of local communities and the South African economy.