POLOKWANE – MC Mining (formerly known as Coal of Africa or CoAL) is a subsidiary of Baobab Mining and Exploration, which owns and develops the Makhado project, in January applied to both the Department of Mineral Resources (DMR) and Ledet for the amendment, owing to a revised project plan, whereby saleable coal will be transported to the Musina rail siding by road rather than rail.
The company by the end of last year abandoned the plans for a massive $500 million coking coal mine in Limpopo, opting instead for Makhado Lite, which will cost $100 million to build but will produce less coal, most of which will be sold domestically thereby minimising freight costs.
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In September 2017 CoAL approved the so-called Makhado Lite project to promote a quicker starting date while the farms’ land claim and other issues were not yet resolved. The company also secured a loan from the Industrial Development Corporation (IDC).
The Makhado Lite project, requiring a 12-month construction period, will produce 1,7 million tonnes of coal per annum (800 000 tonnes of good quality hard coking coal and 900 000 tonnes of thermal coal) and a mining period of more than 30 years.
Before development can begin, the company has to secure access to two additional properties which are subject to regulatory approval.
Brown anticipated this would be completed in the second half of its 2018 financial year so marketing – through largely domestic offtake – and fundraising could kick in. MC Mining CEO, David Brown, said the company has commenced the process to obtain surface rights access in terms of South African mining legislation.
The company in January asked for the change to transport coal from the project to the Musina rail siding by road rather than rail following the amendment in the company’s Makhado Project due to the non-availability of two farms, Luken and Salaita, which are under a land claim, and which the government wanted to expropriate without compensation in March.
Brown confirmed this but said MC Mining was not involved in the dispute which was between the landowner and government. He said it was immaterial to MC Mining whether the farms were owned by the current holders or by the community which has brought the land claim as the company holds the mining rights to these farms and are following a separate process to gain access in terms of the provisions of the Minerals and Petroleum Resources Development Act (MPRDA).
“We will have a discussion on access with whoever the owner of the land is at that time and compensation for that access has to be based on a fair and equitable market value. People must draw their own conclusions on what a fair value is for those farms,” Browne said.
The IDC advanced loan funding up to R240 million to Baobab Mining and Exploration for use at the Makhado project in two tranches of R120 million. The first tranche of R120 million was already drawn in June 2017.
The Makhado Project is situated in a water scarce area and the company’s first water use licence, issued in January 2016, was appealed by various organisations in April 2016, but the suspension of the licence was lifted by the Minister of Water and Sanitation in May 2017.