EXCURSION • will be used to upgrade coal from the mines and is expected to provide significant economic benefits to Wescoal .
Outlook With coal reserves of more than 300 million tons , the majority of which is committed to Eskom through long term CSAs , Wescoal has a stable revenue base from which to grow . The significant investment that has been made into the operations are starting to bear fruit , as the company starts to reap the rewards of stable run-of-mine production from its mines , allowing it to meet its contractual supply commitments to Eskom .
Wescoal sells most of its coal to the domestic market , so it has not been able to take advantage of the historical high ZAR export coal prices that we are currently seeing . However , the relatively stable demand from Wescoal ’ s major customer Eskom , supplied in terms of long-term contracts that are based on fixed prices , mitigates risk for the group and provides a sense of comfort for the junior miner .
The recent rally in seaborne prices may however benefit Wescoal group ’ s trading business which supplies the local industrial market . Higher export prices drive domestic prices up as local producers look to ship their product out of the RBCT , reducing local availability . A more favourable local industrial market will be welcome by the trading business which has been under pressure since the start of the Covid-19 pandemic .
Wescoal ’ s current focus is to maintain steady production from its existing operations and establish steady coal supply to Eskom from Moabsvelden and Arnot . While there are no inorganic growth aspirations in the short term , it has started exploring opportunities in the renewables space .
The company has begun a process of reviewing its strategy to transform into a broader energy company , which it hopes will see it play a part in the shift to cleaner sources of energy in South Africa . The future strategy of the group will also be guided by its recently approved environmental , social and governance ( ESG ) programme . •
The box cut development at Moabsvelden which is designed as one large continuous open pit mine is progressing well .
Arnot Opco recently concluded a 10-year CSA with Eskom that will see this first-of-its-kind broad-based empowerment company supply coal to Eskom ’ s Arnot power station via conveyor belts .
www . africanmining . co . za African Mining • November 2021 • 23