Coal-mining in South Africa February 2006

Transcription

1 Coal-mining in 2006 February 2006

2 Coal Contents February 2006 n market 1 Other coal-linked investments 5 Legislative and policy environment 7 Main participants 13 Ingwe Collieries Limited 13 Anglo Coal 15 Sasol Mining 18 Eyesizwe Coal 21 Kumba Coal 23 Xstrata Coal 25 Smaller participants in the sector 28 Coal Investment Corporation 28 Kangra Coal 28 Total Exploration 29 Anker Coal and Mineral Holdings 29 Wakefield Investments 30 Kuyasa Mining 31 Other participants in the sector 32 Afriore 32 Benicon Coal 32 Black Wattle Colliery 32 Coastal Fuels 32 Graspan Colliery 33 Ilanga Coal Mines 33 Leeuw Vaalkrantz Colliery 33 Mining Contractors VHD 33 Slater Coal 33 Sumo Colliery 34 Woestalleen Colliery 34 Main sources 35

3 n market According to s Department of Minerals and Energy (DME), produced 242,8- million tons of saleable coal in 2004, making the country the fifth-largest coal producer in the world, after China, the United States, India and Australia. Most of s production, of which 0,5% was anthracite and the rest bituminous coal, was from the mines controlled by six large mining groups Ingwe, a subsidiary of BHP Billiton; Sasol Mining; Anglo Coal; Kumba Resources; Eyesizwe and Xstrata. Anthracite coal is geologically older than bituminous coal and more expensive. The DME reported that some 178,3-million tons of production was sold locally in 2004, at a value of about R13,6-billion, while 67,9-million tons was exported, at a value of about R14,5-billion. The coal export infrastructure constraint was the reason for the 3,5-million tons decrease in exports. Of the local sales, demand was primarily from the energy sector, which uses coal to meet more than 77% of primary energy needs and 90% of electricity production needs. The country s electricity utility and world s biggest coal buyer, Eskom, burnt 105-million tons of coal in 2004 at its 13 coal-fired power stations which have a combined nominal capacity of MW, representing 90% of the utility s total nominal capacity of MW. Eskom buys coal from Anglo American, BHP Billiton, Kumba Resources and Eyesizwe Coal Mining, and is currently in talks with Sasol and Kumba to secure more supplies. Further, the company is in the process of recommissioning three mothballed power stations that will further increase the company s demand for coal. The three power stations Camden, Grootvlei and Komati are to be brought back on line in 2007, 2008 and 2009 respectively, and could spur on the development of several greenfields and brownfields coal-mining projects. The n government has unveiled a R107-billion project to increase the country s electricity capacity by 2009, some of which will involve the introduction of new coal-fired power stations, with the balance coming from hydro, gasturbine and other generation platforms. Other local demand sectors include the petrochemicals industry, in which coal serves as the primary feedstock for synfuels; the steel industry, which requires coal for its blast furnaces; the mining industry; the cement industry; the metallurgical industry and merchants. While the local coal market remains the backbone of the industry in terms of demand, the majority of local coal producers revenue is generated from high export prices, which subsidise coal produced for domestic use. Generally, the local coal price is low, while the export price has been increasing, although the current rand:dollar exchange rate has meant that, despite rising export prices, n coal producers have been put under pressure. It would have benefited local coal producers to increase their export levels, but capacity and infrastructure constraints at the country s largest coal export terminal previously preventied this. However, this is soon set to change with the recent announcement of Spoornet s expanded rail capacity intended to feed the expanded Richards Bay Coal Terminal. In 2004 was the world s fourth-largest coal exporter, after Australia, Indonesia and China, and is the largest exporter of coal into Europe. European destinations receiving significant amounts of n coal include Spain, the UK, the Total Global coal production and export Production Exports Country Mt % Rank Mt % Rank China 1 956,2 42, USA India Australia Russia Indonesia Poland Kasakhstan Ukraine Colombia Canad Other Total Source: Department of Minerals and Energy 1

4 Netherlands, France, Germany, Portugal, Denmark and Belgium and in all, represented approximately 82% of s coal exports in While exports into Asia are decreasing, with South Africa s market share in that region being eroded by Australian, Indonesian and Chinese coal, n coal exports to Europe have been increasing, largely as a result of a lack of availability of steamcoal from European producers, depleting stockpiles, and an unstable and unreliable supply from Russia. It is thought that European demand has been the main driving force behind South Africa s rising export coal price. Exports to Asia may return to former levels with an unexpected rise in demand for n export coal by countries in the region, especially India. The introduction of the European emissions-trading system, in January 2005, was expected to affect local coal producers, as countries not applying clean-coal technology would suffer penalties in the form of carbon taxes or not be allowed to supply coal to the European community at all. This represented a problem for n coal producers, which previously did little in terms of clean coal technology development. However, in s favour is the fact that the country s coal has very low sulphur levels, causing less pollution than coal containing higher levels of sulphur. By far the majority of n coal exports are shipped through the Richards Bay Coal Terminal (RBCT), in the Kwazulu-Natal province. The terminal currently has a nominal handling capacity of 72-million tons, and originally planned to expand this to 82-million tons a year, but it was announced in late 2005 that the expansion would be scaled up to 92-million tons. Exports from the RBCT have largely been limited to shareholders of the RBCT company Ingwe Collieries, Anglo Coal, Xstrata, Total Coal, Sasol Mining, Kangra Coal and Eyesizwe Coal creating a situation whereby small independent firms, particularly new black economic empowerment (BEE) companies, are unable to make use of the terminal, and therefore unable to extend into the export market, as the two other coal terminals used by n exporters the Durban coal terminal, also situated in Kwazulu-Natal, and the Matola terminal, situated near Maputo, in Mozambique each only have the capacity to export between one- and two-million tons of coal a year, making them very small players in the coal market. Further, transporting coal from the Durban and Matola terminals involves much higher transportation and handling costs, making it unprofitable for smaller companies to export. None of the export terminals have the required infrastructure to cater for increased exports, and this is regarded as a long-term impediment to the growth of the local coal industry, as mining companies want to be assured that the necessary infrastructure will be available to allow for the export of additional production before they make large capital investments in starting up new mines. The infrastructure constraints have even contributed to the decision by large local coal-producing companies such as BHP Billiton and Anglo Coal to expand their offshore coal-mining activities in countries such as Venezuela, Indonesia and Australia. In November 2005, the deal was scaled up with the announcement of the new plan suggesting an enlargement from the 72 Mt/y base to 92 Mt/y, by July The new 20-million t/y brownfields expansion project will cost about R1-billion and will include the original Phase 5 expansion, also known as the South Dunes Coal Terminal (SDCT). The new plan, which has been widely canvassed within the multistakeholder, Coal Industry Task Team, places strong emphasis on new entrants, and more particularly black economically-empowered (BEE) coal exporters. For instance, four-million tons a year has been specifically set aside for small BEE miners, with export volumes of t/y or less. It was also stressed that two-thirds of the six-million t/y, set aside for the SDCT members, would be controlled by historically-disadvantaged ns, with two-million tons to go to Newco, the yet-tobe-formed BEE colossus that embraces, among others, the coal businesses of Kumba Resources and Eyesizwe the balance will be split by Stateowned Eskom Enterprises (1-million t/y) and the empowered Golang Coal (3-million t/y). Empowered entities will have first claims on the remaining socalled 10-million t/y subscription tonnage. A market-demand study has been used to access appetite among non-rbct shareholders for the subscription capacity, with the coal majors indicating yesterday that they would yield to smaller and/or empowered interests should these export plans prove credible. In the event of this tonnage not being absorbed, it is possible for the current shareholders - Ingwe, Anglo Cola, Xstrata, Total 2

5 Coal, Sasol Mining, Kangra Coal, and Eyesizwe to make their own subscriptions for the capacity. Bidding for the 10-million t/y of additional capacity was expected to start during the second quarter of The capacity would be made available through new shareholding or commercial-usage arrangements at internationally-competitive rates. RBCT is still to finalise funding for the project, but the SDCT members have already indicated that they will pay their way with a R400-million capitalexpenditure contribution, which will see them becoming shareholders in RBCT. The R600-million to R650-million balance will be raised by RBCT itself and will be recouped in one of three ways: through companies purchasing shareholding in line with their capital-expenditure contributions; through shortterm, probably three-year, take-or-pay contracts; or through longer-term contracts. Transnet, which owns railways company Spoornet and the National Ports Authority (NPA), has been made aware of the new plan, but has stated that it is still necessary to nail down final capacity and tariff details with the State-owned entity. Spoornet anticipates that it will need to invest about R7-billion to upgrade the capacity of the coal corridor. Both Transnet and Spoornet have indicated a willingness to expand the infrastructure and, more specifically, the rolling stock available on the line in order to meet the needs of the coal industry, but have also insisted that the tariff regime be calibrated with its own return objectives. The NPA is expected to spend some R430-million on a new berth at the terminal that will increase the number of berths to six, while Spoornet is expected to spend R3,8-billion over the next five years on upgrading the coal line between Witbank and Richards Bay. The expansion plans follows an agreement signed between RBCT, the NPA and Spoornet in 2004 whereby the NPA and Spoornet agreed to invest in upgrades if larger capacity was allocated to BEE coal producers. Spoornet, through its CoalLink business unit, currently transports coal to the RBCT via a 580 km line extending from the Mpumalanga province, where most of the country s coal production is concentrated. According to the RBCT, the extra capacity could bring around R6-billion a year of foreign currency into and has the potential to earn around R1-billion a year for Spoornet. In 2004, Mpumalanga was the source of 80% of s run-of-mine coal production, while the Limpopo province produced 11% of output, the Free State 7%, with the remaining 1% coming from Kwazulu-Natal. In all, the country s coalfields extend over an area of 700 km from north to south and 500 km from east to west. Generally, the rank or carbon content of the coal increases eastwards, while the number of seams and their thickness decrease. has 55,3-billion tons of recoverable coal reserves, making it the fifth-largest holder of coal reserves in the world. Other countries with significant reserves include the US (111,4-billion tons), the Commonwealth of Independent States (97,6-billion tons), India (72,7-billion tons), and China (62,2-billion tons). Owing to a delay by the DME, the coal reserve figures for 2004 will only be available by the first quarter of It is thought that s reserves will probably last for between 32 and 50 years, after which the reserves will be exhausted, and the remaining coal will be too expensive to mine. Some analysts have indicated that the reserves could last for more than 100 years but, based on current run-of-mine production, this does not seem likely. It is thought that the life of the coal-mining industry could be extended if coal-miners and the industries that make use of coal were to adopt clean-coal technologies (CCTs). CCTs could extend the operating lives of existing collieries, as they have the capacity to enhance the thermal efficiency of electricity generators, and thus lessen the demand for coal, as well as to make the exploitation of currently subeconomic coal resources possible. Further, CCTs will enable the use of the country s existing coal discards, estimated at more than a billion tons. Other benefits of CCTs include increased availability of currently-sterilised agricultural land in Mpumulanga, a reduction in carbon dioxide and sulphur oxide emissions and compliance with the Kyoto Protocol. CCTs that is considering include fluidised-bed combustion, which makes it possible to burn high-ash, low calorific value coal; underground coal gasification, which is a process whereby coal is converted in situ to a combustible gas that can be used for power or chemical production; and the removal of carbon dioxide from coal combustion before storing it underground, returning it to nature through photosynthesis or converting it to such 3

6 value-added products as high-tech carbon or pure carbon dioxide. has been admitted as a participating member of the International Energy Agency s programme of research, development and demonstration on clean-coal science, which will enable the country to cooperate with leading researchers in the area from Australia, Europe and North America. Without the introduction of CCTs, it is expected that, by 2020, s few big operating mines, which produce the bulk of the country s coal output, will have reached a state where production will either be low or the mines will have to be shut down. To compensate for the loss in production that will ultimately follow as these mines near closure, new mines will have to be brought into production. However, since there are no large coal reserve blocks left in the country, the only viable solution will be to create a large number of smaller mines, which individually might not produce large amounts of coal but which, combined, will be able to recover the country s production and export potential. Such a change in the industry could create an opening for new small- and medium-sized companies and BEE producers to enter the market, and would change the industry from the current situation, which sees large mines, classified as those with an output of more than ten-million tons a year, producing more than 50% of the country s total saleable coal output, while small mines, classified as those with an output of less than a million tons a year, produce less than 10% of total saleable output. Several small and medium-sized companies have already entered the industry with the intention of mining coal deposits deemed to be uneconomic by the large mining houses which dominate the sector. Further, the industry has been commonly targeted by BEE companies wishing to enter the mining sector, due to the fact that the country s coal resources are shallow, and can be exploited relatively cheaply. During the last few years, the new BEE coal-mining companies have expanded in number as well as in output per mine. As a result of the Mineral and Petroleum Resources Development Act (MPRDA) implementation, in May 2004, companies with significant coal reserves in the country have made more of their noncore assets available to BEE companies. The latter companies, assisted in their activities by the DME and the Coal Industry Task Team, now control 16 per cent of the country s coal production. With the consolidation of a number of new deals and joint ventures, already approved but not yet in the public domain, this figure will likely increase to 24 per cent. With the implementation of the expanded RBCT and additional export capacity of 20-million t/y, it is foreseen that more BEE mines will be able to begin production. Current export capacity for 2008 will be 92 million t/y. New entrants to the market, however, are faced with challenges, some specific to s coal-mining sector, while others are relevant to the mining-sector more generally such as difficulties in obtaining capital, marketing, and mining and beneficiation know-how. There are currently several active BEE coal-miners in, including Eyesizwe Coal, Kuyasa Mining, Endulwini Resources, Leeuw Mining & Exploration Umnotho wesizwe, Ilanga Coal Mines, Imbani Resources, Ingcambu Investments, Mashala Resources, Shanduka Resources, and Zinoju Investments. Eyesizwe is the largest of these companies, and has a production base of 25-million tons of coal a year from five collieries. The company has been the BEE partner of choice for several of the industry s larger players. The company is set to consolidate its position as the largest BEE coal producer once its merge with the coal assets of Kumba Resources is completed. Many larger planned investments that were awaiting clarity on the RBCT expansion will now be implemented. With the implementation of the number of coal projects and the RBCT expansion, the outlook for s coal sector is very optimistic, as coal production and exports should increase by 10 to 15%. The re-evaluation of the remaining coal potential in the Central Coal Basin will give many economic-empowerment companies the reserves needed to enter the industry. The increasing popularity of n coal exports will once again create the opportunity for old and new coal-mines to increase output and keep the inland coal prices at affordable industry levels. 4

7 Other coal-linked investments In order o ensure additional capacity, Eskom is involved in a project to demothball three coal-fired power stations Camden, Grootvlei and Komati built in the 1960s, and decommissioned in the late 1980s and early 1990s as a result of excess capacity. The refurbishment of the Camden station should be complete by March 2008, and Grootvlei is expected to come back on stream by November The Komati plant is targeting completion in November With a price tag of about R12-billion, the demothballing project is costing only about 40% of what it would have cost to install the same amount of new capacity. Together, the three stations will contribute MW to Eskom s total capacity. Eskom plans to build a greenfields coal-fired power station in the Lephalale area in the Limpopo province. The coal-fired station, to provide baseload capacity, is estimated to cost between R17- billion and R20-billion. Eskom plans for the first unit to be in commercial production in Eskom and Transnet are interrogating a R1,6-billion mini heavy-haul coal corridor, linking the coalfields of Mpumalanga to Eskom s Majuba and Tutuka power stations in Kwazulu-Natal and Mpumalanga respectively. The line would effectively be an extended siding, with dedicated rolling stock, from the main coal corridor, which runs from Mpumalanga to the RBCT in Kwazulu-Natal. Management at Eskom view logistical flexibility as central to dealing with challenges associated with rising electricity demand and to ensuring that coal is at the right place at the right time. This is particularly important for Majuba and Tutuka, which are the only remaining plants in the system able to deal with increasing load swings. At present, coal is trucked to Majuba, while Tutuka is receiving coal from the New Denmark Colliery. The idea is to replace the current road-haulier arrangement to Majuba and to supplement supply to Tutuka. The rail solution is reportedly favoured by Eskom over a possible conveyor belt or even a slurry pipeline, and will transport about 12-million tons of coal yearly and take hundreds of trucks off the roads. It has emerged that Eskom, which costed the project and received board approval for the plan, initiated the rail project. But in discussions with government, it was decided that the project should be handed over to Spoornet, which will fund and build the project as part of its R40-billion suite of investment projects set to unfold over the next five years. Mittal Steel SA will spend R800-million at its Newcastle plant, in KwaZulu Natal. It has already completed the pulverised-coal injection (PCI) plant at a cost of R211-million. The Newcastle plant is also busy with plans for the relining of its blast furnace N5 at a cost of R590-million, with an expected completion date in the second half of The main advantage is that the required quality for the PCI is available locally from the Grootegeluk mine, belonging to Kumba Resources, and this allows Mittal to purchase coal in rand as opposed to dollars for imported coking coal. Mittal Steel is further involved in the coke battery recommissioning plant upgrade in Newcastle. This R455-million proposed project will entail the construction of new materials-handling infrastructure for coal and coke, the dismantling and complete rebuild of one of Mittal s decommissioned coke oven batteries, and a major upgrade of the gas-cleaning plant at the Newcastle steelworks. The new battery and adjacent gas plant will be constructed using modern, state-ofthe art technology. The new battery will consist of 50 coke ovens, built on the understructure of the decommissioned battery. The dimensions of the planned new coke battery will be similar to those of the existing structure about 12 m in height and 70 m in length. The existing understructure will be slightly modified to prepare for construction. It is anticipated that the new coke battery will increase Iscor s coke production by between t/y and t/y. Mittal is evaluating whether to produce metallurgical or ferroalloy coke in the new battery. The plant is expected to be commissioned in May/ June 2006, but the first coke output is scheduled for August 1, BEE company, Endulwini Resources, has bought the Pegasus coal reserve, near Witbank, from Ingwe Collieries, a division of BHP Billiton, in partnership with London-listed Bisichi Mining. The Pegasus reserve contains about 12-million tons of high-quality low-sulphur coal, which will be opencast-mined through a joint-venture vehicle, Ezimbokodweni Mining. Ezimbokodweni is 51% owned by Endulwini and 49% owned by Bisichi. About R150-million will be invested into the development of an opencast mine over the next 24 months which will result in the creation of 250 new jobs. When operational, Ezimbokodweni will produce 1,5-million tons of coal a year, which will raise the total production of Endulwini Resources to over three-million tons a year. Endulwini Resources is one of the very few 5

8 black-owned companies exporting coal through its own entitlement at the Richards Bay Coal Terminal. The company has also acquired the Groenvlei coal reserves, near Utrecht, in northern Kwazulu-Natal, from Ingwe. Groenvlei has measured reserves of 30-million tons of good-quality steamcoal. Empowerment mining group Motjoli Resources plans to develop a coal mine in Mpumalanga in partnership with listed Australian company GVM Metals, following the R18m acquisition of mining rights that had been held by Holfontein Investments. The mine will be a 51%:49% joint venture partnership between Motjoli and GVM. Work has been done on the project, with a number of exploration holes drilled, and the Matjoli intends to do more drilling. Matjoli estimates that the mine could be established and producing in about two years. Motjoli estimates that there are at least 25-million tons of coal at Holfontein, which means, with an output of one-million tons a year, the mine will have a 25-year life span. 6

9 Legislative and policy environment The Mineral and Petroleum Resources Development Act (MPRDA), which came into effect on May 1, 2004, was drafted in an attempt to formulate a regulatory framework for s mining and minerals industry. The aim of the legislation is to correct historical imbalances in the industry caused by the legacy of apartheid, without threatening its attractiveness to domestic and international investors. The Act follows international trends in minerals regulation, especially those seen in Canada, Australia and North America, and centres around the provision that all mineral rights will revert to the State, representing a move away from the previous system where ownership of mineral resources lay in the hands of private companies. The intention of this development is to ensure increased access to mining activity for historicallydisadvantaged people, and to enable the State to put an end to the hoarding of mineral rights, with a use-it-or-lose-it principle ensuring that if a company fails to use its mineral rights it will lose those rights after a certain period. This will affect mining companies holding unutilised reserves, as well as those who own projects that have been shut down due to unprofitability. In addition, the principle allows the State the discretion to force the holder of mineral rights to abandon development projects if it is of the opinion that the project is not producing at the most efficient levels. The Act also answers the need for broader access to geological, geochemical and geophysical information, which, in the past, was held by the entity that conducted the exploration and was protected by restrictions on disclosure. Through this, and improved access to mineral rights, the Act is designed to bring an end to the situation in which a few large companies dominate s mining industry, and is intended to stimulate the development of s junior mining sector, which is currently small and compares poorly with junior mining sectors in other parts of the world. Junior mining companies are expected to benefit from the proposal in the Act that requires evidence of the participation of historically-disadvantaged people in applications for prospecting and mining rights. Government and industry have drafted a socioeconomic empowerment charter that will form part of the Department of Minerals and Energy s (DME s) regulations and criteria for awarding prospecting and mining licences. The development of the charter was provided for in section 100 of the Mineral and Petroleum Resources Development Bill, under the heading Transformation of the Industry, which stated that within six months of the Bill taking effect as an Act, the Minister of Minerals and Energy must have developed a charter that sets the framework, targets and timetable for effecting the entry of historically-disadvantaged ns into the mining industry. The charter establishes how to achieve equitable access to s mineral and petroleum resources for all ns, and outlines how the creation of employment and the advancement of social and economic welfare can take place through the appropriate use of these resources. The charter also sets a framework that ensures that the holders of mining and production rights contribute towards the socioeconomic development of the areas in which they are operating. The charter has been the source of much speculation and agitation among many in the industry, but is considered necessary in order to correct the racial balance of the n mining industry, which remains white-controlled. There has been some confusion about how the mining charter will be affected by the recently-published Broad-Based Black Economic Empowerment Codes of Good Practice, but government has indicated that the charter and the MPRDA will remain the definitive economic empowerment medium for the mining industry. This decision, as well as the charter itself, will be reviewed after a five-year period. The charter requires that 15% of the ownership of existing mining industry assets must be held by 7

10 historically-disadvantaged ns within five years, and 26% within ten years. While the charter does not provide clarity on the issue of new mining projects, a meeting, held in July 2004, between the Department of Minerals and Energy, labour unions and mine resource owners, resolved this issue. Agreement was reached that all new mining projects where the mineral rights were previously State-owned must have a 51% BEE shareholding within the one-year transitional period, and a 26% BEE shareholding if the mineral rights were formerly privately held. For pending applications for prospecting rights the same criteria will apply. All applications for rights not falling into these categories that are in the custodianship of the State will be subject to a minimum 26% BEE participation. The targets for the participation of historicallydisadvantaged individuals must be reached by individual companies, but companies can earn offset points whereby the ownership target will be moderated should the company facilitate valueaddition downstream opportunities. This will be clarified in future promotion of beneficiation legislation. The charter also requires companies to procure from BEE companies, engage in skills upliftment, improve worker housing conditions and develop social plans for retrenched workers. These obligations cannot be used to offset equity obligations. In addition to requiring the involvement of historicallydisadvantaged people, which will be facilitated through the empowerment charter, the Act also requires that companies consult with government should they wish to beneficiate locally-produced minerals outside the country. This provision is designed to promote the use of mineral resources for sustainable economic development, and to avoid the trap that many developing countries fall into of exporting jobs through the exportation of unbeneficiated minerals. Based on this, the granting of mineral rights will be influenced by the involvement of historicallydisadvantaged people, and by plans to beneficiate the minerals locally. In order to give effect to the charter, a scorecard has been released by which companies will be evaluated to determine whether they have complied with the provisions contained in the charter and the Act, and thus to determine whether their old-order mining rights should be converted to new rights. The entire scorecard will be taken into account in the adjudication by the Minister of Minerals and Energy. When considering applications received on the same date, the Minister will give preference to applications from historically-disadvantaged persons. Mining rights for established operations will offer security of tenure for an initial 30 years, renewable for additional 30-year periods. The Act allows for the provision of a retention permit, allowing the company granted the mineral rights to retain the rights without developing them for a period of three years, renewable for two years, if market conditions are poor. New prospecting rights are valid for a period not exceeding five years, with possible renewal once for another period of a maximum of three years and, once prospecting has been completed, the company must reapply to convert these rights into mining rights if it wishes to establish operations. All new mining licences, including those for existing mineral rights properties, will require evidence of a black economic empowerment plan, a social plan, and an environmental management plan. Under the MPRDA, a transitional period allows current holders of mineral and mining rights to convert their old-order rights to the new order of rights. Mineral-rights holders who did not hold prospecting permits or mining authorisations and who were not actively prospecting or mining on their properties were given a year from the date on which the Act came into effect to apply for prospecting or mining rights under the new legislation. Mineral-rights holders who did not apply within this period lost their rights, and any other persons or groups will be able to apply directly to the State for prospecting or mining rights for the areas formerly covered by those rights. Mineral-rights holders who were actively prospecting or mining on the properties to which their oldorder rights relate (with the necessary permits or authorisations from the DME) were given two and five years respectively, from the date on which the MPRDA came into effect, to convert their old-order rights to new-order prospecting or mining rights. An application has to be lodged at the relevant DME regional office, depending on where the land 8

11 1 2 Scorecard for the broad-based socioeconomic empowerment charter for the n mining industry Human resource development Description Has the company offered every employee the opportunity to be functionally literate and numerate by the year 2005 and are employees being trained? Has the company implemented career paths for HDSA employees including skills development plans? Has the company developed systems through which empowerment groups can be mentored? 3 Has the company established a plan to achieve a target for HDSA participation in management of 40% within five years and is implementing the plan? 4 Has the company established a plan to achieve a target for women participation in mining of 10% within the five years and is implementing the plan? 5 Has the company subscribed to government and industry agreements to ensure non-discrimination against foreign migrant labour? 6 For company-provided housing has the mine, in consultation with stakeholders, established measures for improving the standard of housing, including the upgrading of the hostels, conversion of hostels to family units and promoted home ownership options for mine employees? Companies will be required to indicate what they have done to improve housing and show a plan to progress the issue over time and is implementing the plan? 7 8 Employment equity Has the company published its employment equity plan and reported on its annual progess in meeting that plan? Has the company identified a talent pool and is it fast tracking it? Migrant labour Mine community and rural development Has the company cooperated in the formulation of integrated development plans and is the company cooperating with government in the implementation of these plans for communities where mining takes place and for major labour-sending areas? Has there been effort on the side of the company to engage the local mine community and major labour-sending area communities? (Companies will be required to cite a pattern of consultation, indicate money expenditures and show a plan). Housing and living conditions For company-provided nutrition has the mine established measures for improving the nutrition of mine employees? Companies will be required to indicate what they have done to improve nutrition and show a plan to progress the issue over time and is implementing the plan? Procurement Has the mining company given HDSAs preferred supplier status? Has the mining company identified current level of procurement from HDSA companies in terms of capital goods, consumables and services? Has the mining company indicated a commitment to a progression of procurement from HDSA companies over a 3 5 year time frame in terms of capital goods, consumables and services and to what extent has the commitment been implemented? Ownership and joint ventures 9 Has the mining company achieved HDSA participation in terms of ownership for equity or attributable units of production of 15 per cent in HDSA hands within 5 years and 26 per cent in 10 years? Beneficiation Has the mining company identified its current level of beneficiation? 10 Has the mining company established its base-line level of beneficiation and indicated the extent that this will have to be grown in order to qualify for an offset? Reporting Has the company reported on an annual basis its progress towards achieving its commitments in its annual report? 5-year target 10-year target Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No No No No 15% 26% No No No 9

12 120 days? days 30 days? days 180 days 30 days 30 days 14 days 14 days 14 days is situated. Within 14 days of lodging an application for the conversion of prospecting or mining rights with the DME, a decision as to whether or not this application has been accepted will be made by the department. If an application is rejected, the process ends there. In the case of prospecting rights, if the application is accepted, the mining company is given 30 days to consult with interested and affected parties, and to give the results of this consultation to the DME. In respect of a mining right, the mining company is given 180 days to consult with interested and affected parties. Then, depending on whether it is an application for a mining title conversion or prospecting right, the mining company is given either 180 days or 60 days respectively to devise an environmental management plan. Once this has been submitted to the DME, the department has 120 days to assess the application.the applicant is informed within 30 days for prospecting rights and 180 days for mining rights, as to whether the application is granted or rejected. If granted, the applicant is called to come and execute the right, which takes place prior to the registration of the relevant right. The applicant must then lodge the right granted and executed for registration within 30 Process for a mining rights application Post notice 3 (Reg) Applicant to lodge mining application 10 and 22 (Act) 10 and form D (Reg) Regional manager accepts applications 10 and 22 (Act) Place advert 3 (Reg) IAPs may comment 10 (Act) Evaluate scoping report 43 (Reg) Request comments from other Gov. Dept. 49 (Reg) Other Gov. Depts comments 49 (Reg) Collate and forward comments to applicant 49 (Reg) Note: 1) 40 (Reg) refers to section 400 of the Regulation or Act (Act). 2) days are working days not calendar days. Source: Fiona Cessford and Allison Burger Issue notice to applicant 10 and 22 (Act) 3 (Reg) Submit scoping report 22 (Act) 3 (Reg) Undertake EIA and develop EMP in accordance with scoping report 50 and 51 (Reg) Notify and consult IAPs 22 (Act) and 50 (Reg) Subit EIA and EMP 22 (Act) Request comments from other Gov. Dept 40 (Act) Other Gov. Dept comments Approve of refuse 39 (Act) days of the execution date. This closes the licensing process. As of June 2005, the DME has issued more than 300 new-order licences for prospecting and mining, but has received several thousand applications. Mining companies are discontented over the time taken to be awarded new-order rights, and the lengthy application process has been identified by some as causing widespread uncertainty among mining and exploration companies operating in. Legislation, separate to the MPRDA, aimed at overhauling the registration of mining titles and setting up a central office to regulate all mining and prospecting rights has been passed. It is known as the Mining Titles Registration Amendment Act. This law seeks to bring registration in line with the MPRDA, and aims to establish a central point for the registration and recording of all mining titles. The MPRDA represents a significant move away from the old regulatory regime, and the DME is required by the Act to put in place the necessary supporting infrastructure to implement it. A Minerals and Mining Development Board, consisting of no fewer than 14 and no more than 18 members, will be established to advise the Minister on the sustainable development of the country s mineral resources, as well as on the transformation and downscaling of the industry. The board will also play a role in dispute resolution, and will, in consultation with the Mining Qualifications Authority, promote the development of human resources. To facilitate the passage of the new regulatory environment, the Act provides for transitional arrangements that will be used to phase-in the new framework. These will ensure that security of tenure is protected, and will give the holders of old-order rights and OP26 rights the opportunity to comply with the Act. In spite of the transitional mechanisms, however, uncertainties remain regarding the practical implementation of the Act, and business has expressed concerns over this. Other concerns being voiced by business include what they have identified as broad discretionary powers granted to the Minister, and the absence of clearly-defined recourse to the courts in the event of having to challenge a ministerial decision made by virtue of these powers. 10

13 Government, however, holds that, in comparison to the Minerals Act of 1991, the Act limits the extent of discretionary power through containing objective statutory requirements that will be used to determine whether a company is granted prospecting or mining rights. Government also emphasises that, as a fundamental right contained in the n Constitution, recourse to the courts is implied, and is not excluded under the new Act. Concerns have also been raised over what is perceived as overregulation of the industry, demonstrated in the Act s requirement that companies consult with government should they wish to beneficiate locally-produced minerals outside the country. Government feels justified in this, however, as it provides incentives for the local beneficiation of minerals. In addition, business is concerned that, through the use-it-or-lose-it principle, mineral resources previously held by companies that were likely to exploit them over a long period, may now be developed in the next few years, increasing supply to the market and disrupting the delicate supplyand-demand balance, thereby exerting downward pressure on metals prices. Of the country s minerals industries, the gold industry is least likely to be affected by this, as most remaining gold deposits are deep and of a complicated geology, thus representing a barrier to entry, as mine development will be extremely costly. Entering the diamond industry may also prove difficult, as most known diamond deposits are already being mined, and a newcomer would have to conduct exploration, a factor which may serve as a deterrent. The impact of the use-it-or-lose it principle on the coal industry, however, is expected to be more significant, as the country has extensive shallow coal resources that could be exploited relatively cheaply. Nonetheless, a barrier against entry to this industry exists in the form of the Richards Bay Coal Terminal, which is currently operating at maximum capacity, thereby limiting the ability of any newcomers to export their production. The industry most likely to be affected is the platinum industry, where barriers to entry are low. Several fairly shallow unmined deposits exist, and investor returns in this industry are known to be high, making investments attractive. The iron-ore industry may also be targeted by new investors, as prices are stable and margins are high. However, given that new projects of any significant scale take some four years to reach full production means that no imminent rise in metals production is expected, and that the market will have time to readjust its balances. The environmental policies of the MPRDA are expected to ensure responsible mining practices, to some extent, although the enforcement of these policies will be the ultimate determinant of their effectiveness. Everyone applying for a prospecting or mining right must lodge an environmental management programme report (EMPR) evaluating the impact of the proposed operations on the environment and on the socioeconomic conditions of affected people. In order for this EMPR to be approved, applicants must make the prescribed financial provisions for the management of environmental impacts, and for rehabilitation. The Act empowers the Minister to force a permit holder to take urgent remedial action to deal with an environmental hazard, and the minister is even authorised to use State funds to pay for this, although the money must be recovered from the permit holder. Although certain other environmental provisions are made in the Act, it does not represent a definitive piece of environmental legislation, and the interrelationship between the Act and other environmental laws remains important. Firstly, environmental rights are included in the Constitution, which requires that environmental considerations are accorded appropriate recognition in the n economy. To substantiate these environmental rights, the National Environmental Management Act (Nema) explicitly outlines principles for cooperative environmental governance, and mining companies find themselves subject to this piece of legislation. One of the most significant environmental challenges faced by the mining industry relates to water and, in order to define responsibility in this area, companies fall under the National Water Act. 11

14 As a result of this, it has been noted that environmental law in appears fragmented and, on occasion, contradictory, with the result that uncertainty exists as to what is required of mining companies with regard to environmental protection. A new piece of legislation intended to regulate South Africa s mining sector, released early in 2003, is the Mineral and Petroleum Royalty Bill, which has caused much concern among local miners. The draft bill imposes royalties on revenues derived from mineral production in the country. Gold royalties have been proposed at three per cent, and platinum at four per cent. The royalty on coal, copper, zinc, iron-ore and nickel has been proposed at two per cent, while the royalty on diamonds has been proposed at eight per cent. The royalty on offshore oil and gas has been proposed at one per cent. Other features of the proposed legislation include that royalties will also be levied on mineral beneficiation activities, and exemptions will be granted to operations mining low-grade ores, those deemed to be marginal and those whose economic viability is questionable. the rates applicable in other mining countries, and appears set to persist with its proposed revenuebased system. The process of legislating the bill is still in its early stages, and mining houses are submitting comments on the document, which are being considered by the National Treasury. The Finance Minister has indicated that this piece of legislation will take effect in Still to come is the Promotion of Beneficiation Bill, which is expected to provide incentives for upstream companies that facilitate downstream investments, in order to reduce the exporting of unprocessed mineral products and to promote local value addition. The process of drafting this bill has been slowed in order to allow for greater engagement with industry, which seems opposed to the idea, claiming that it is not reasonable to expect those involved in primary extraction to get involved in beneficiation. More clarity on the beneficiation bill is expected during The royalties are to be paid quarterly, on conversion of mining rights in terms of the MPRDA. Mining companies are concerned over the consequences such a piece of legislation could have, and the Chamber of Mines, supported by the mining industry, has argued that, if a royalty regime is necessary, it should be profit-based, which would ensure that royalties are payable only when an operation is profitable. The companies claim that the proposed Royalty Bill will reduce the viability of existing operations, increase paylimits and, consequently, cause job losses. The legislation could also substantially increase hurdle rates for new and organic growth projects. Another consequence of the proposed legislation is that it may negate much of the goodwill that has been re-established following the leaking of the mining charter in It is generally believed that the bill, in its current form, will threaten the long-term viability of the industry. Mining industry participants hold that the royalty rates are too high, and that the fact that the rates are levied on revenue rather than profit fails to take into account the total tax package being paid by mining companies. Government, on the other hand, has stated that it arrived at the levy figures after studying 12

15 Main participants Companies with annual coal production of more than 10-million tons Ingwe Collieries Limited Nature of business Ingwe Collieries Limited, a wholly-owned subsidiary of diversified mining giant BHP Billiton, is South Africa s largest producer of coal, and one of the largest energy-coal exporters in the world. The company was formed in 1994 and, in 1998, become a wholly-owned subsidiary of Billiton. In 2001, with the merger of Billiton and BHP, Ingwe became a part of the Energy Coal Customer Sector Group of BHP Billiton. The name Ingwe means leopard in Zulu. Ingwe owns and operates six collieries in the Mpumalanga province of. Four of the mines Khutala, Optimum, Klipspruit and Koornfontein are wholly-owned, while the remaining two Douglas and Middelburg are owned in joint venture with Xstrata Coal, but are managed by Ingwe. Together the Ingwe operations produced 54,65-million tons of coal in the 2005 financial year. A portion of the company s production is exported, through the Richards Bay Coal Terminal, in which Ingwe holds a 37% stake, making it the largest shareholder in the terminal, while a lower-grade coal is sold to power utility Eskom. Relatively small quantities of coal are supplied into the local market. Ingwe has forfeited its rights to the capacity that will result from the phase five expansion at the RBCT, in favour of BEE participants. Zululand Anthracite Colliery, situated 48 km northeast of Ulundi in the province of Kwazulu-Natal, is also part of Ingwe. At the beginning of 2005, Ingwe initiated the sale of its wholly-owned and operated Zululand Anthracite Colliery (ZAC) to Riversdale Mining, subject to the conversion and transfer of ZAC mining rights in terms of the Minerals and Petroleum Resources Development Act of The mine produced t of saleable anthracite in the twelve months to June 2004 and has a workforce of some 700 employees and 300 contractors. Also in the pipeline for Ingwe is the proposed expansion of the Klipspruit mine, near Ogies, in the Mpumlanga province. This expansion will replace output from Ingwe s Rietspruit colliery, which is currently undergoing rehabilitation. In August 2005, BHP Billiton announced that it has pulled back from the proposed expansion of the Klipspruit coal-mine project until it has greater confidence that Ingwe s turnaround in costs can be secured. The current focus is on the Ingwe improvement plan, which is beginning to show benefits. Anglo Coal and BHP Billiton are examining synergies in the vicinity of Klipspruit, also referred to as the Western Complex Area. This area comprises Ingwe s Khutala mine and Klipspruit and Weltevreden prospects, as well as Anglo Coal s coal resources at Zondagsfonetin, Smaldeel and Beesting. Ingwe is also busy with a study to replace the export tonnage from the Douglas Middelburg mining complex. The project will investigate pillar mining, similar to the exisiting Boschmanskrans operation, as well as a replacement coal-washing plant and associated infrastructure. A similar replacement project is also under way at the Optimum colliery. On the environmental front Ingwe and AngloCoal are also developing a water-treatment plant situated at the Anglo Kleinkjopie Colliery that will supply water to the Emahlaleni municipality. Operations The Khutala mine, 100% owned and managed by Ingwe, is situated 55 km west of Witbank in the Mpumalanga province of and is one of the largest underground coal-mines in the world. The mine is primarily an underground operation, making use of continuous miners and bord-andpillar methods to mine up to a depth of 110 m below the surface. Khutala also has an opencast pit, which is mined by contractors and contributed to the operation s forecast overall production of almost 16-million tons of coal in The annual 2 and 4 13

16 seam ROM production is predominantly sold under contract to Eskom Kendal power station. An additional tons of 5 seam is mined and distributed to domestic markets. Khutala employs people. Optimum Colliery, also wholly-owned by Ingwe, first began operating in 1970 as an underground mine, and is currently a large opencast facility, with nine draglines. The mine is situated about 50 km southeast of Middelburg, in the Mpumalanga province, and employs some people. In 2005, Optimum is forecast to sell 14-million tons of coal between Eskom s Hendrina power station as well as other inland and export markets. The remaining mine-life at the operation is estimated at 13 years. The Koornfontein mine, situated 48 km south-east of Witbank, is wholly-owned and -operated by Ingwe, supported in the services area by Douglas Colliery. Operating from the Gloria section the coal seam at this underground mine lies at an average depth of 100 m below surface, and is mined using bord-and-pillar methods with continuous miners. The mine produced 3,6-million tons of export coal in 2005, which was exported through RBCT. Fine coal and beneficiated discard coal are blended and sent to local power utilities as required. Koornfontein has a remaining mine-life of three years, and employs 910 people. The Douglas colliery is owned by a joint venture between Ingwe, which holds 84% of the mine, and Xstrata, which owns the remaining 16%, and is managed by Ingwe. The mine is situated 25 km south-east of Witbank and supplies its products to the export, domestic and local power station markets, depending on the quality, with the lower grade coal being supplied for local power Ingwe s operations generation purposes. In 2005, Douglas, which is the underground operation with a small opencast section, produced five-million tons of export coal and 0,5-million tons of domestic coal. The underground operation employs bord-and-pillar methods using continuous miners from the number 2 and 4 seams, and the opencast mine uses a dragline to expose coal in the shallower reserves, and mines shallow pillar reserves remaining from previously-worked underground areas. The underground mine has a remaining mine-life of three years. The Middelburg mine, situated 20 km south of Middelburg, is also owned by a joint venture between Ingwe (84%) and Xstrata (16%), and is managed by Ingwe. The openpit mine, which uses five large draglines, is the largest producer in the Ingwe group, and was the source of 13,8-million tons of coal in The operation s principal products are powerstation-grade coal for Eskom s nearby Duvha power station, and a higher-quality export-grade product. The Middelburg mine employs people, and has a remaining mine-life of 30 years. The Rietspruit mine, a 50:50 joint venture between Ingwe and Xstrata, was closed during 2002 due to the depletion of the coal reserves, and is currently undergoing rehabilitation prior to the issuance of a closure certificate. The mine, situated 30 km south-west of Witbank, consisted of opencast and underground facilities. Leadership Eliphus Monkoe (President and chief operating officer) Mohamed Seedat (BHP Billiton energy-coal president) PO Box Marshalltown Source: Ingwe Collieries Limited Website: 14

17 Anglo Coal Nature of business Anglo Coal is one of the world s largest privatesector coal producers and exporters, with mining operations in, Australia, Colombia and Venezuela. Its n operations export coal through Richards Bay Coal Terminal and sell fuel to Eskom Holdings. It is the second-largest coal producer in, and the company s n operations include nine wholly-owned mines the Bank, Goedehoop, Greenside, Isibonelo, Kleinkopje, Kriel, Landau, New Demark and New Vaal collieries which together, excluding Isibonelo, produced 54,5-million tons of coal in Anglo Coal also holds an 11% share in the sector s largest black economic empowerment participant, Eyesizwe Coal, a 27% stake in the Richards Bay Coal Terminal, and a 50% stake in the Mafube Colliery. Of the total operating profit of $487-million generated by Anglo Coal in 2004, was responsible for the largest portion $244-million while Australia and South America generated $79-million and $164- million respectively. Anglo Coal recently announced that future expansion in would be driven through joint ventures and with black empowerment partners. Anglo Coal further reported that it had no intention of taking up any of the new 20-million capacity available to it through the expansion of Richards Bay Coal Terminal (RBCT). Anglo Coal s production would need to be based on demand factors, domestically and internationally. It is expected that with Eskom s plans to recommission some of its mothballed power stations, local demand could increase appreciably. Anglo Coal intends to grow exports from the regions in which it operates and, in, has planned major expansionary capital expenditure for developments at Kriel South, Greenside and Kleinkopje, while, in joint venture with Ingwe, has taken the first tentative step towards exploiting adjacent resources in the Western Complex, in South Africa s Mpumalanga province. This proposed project will be subject to the outcome of an investigation that will include a review of the companies coal assets in the area, in particular Ingwe s Khutala mine and Klipspruit and Weltevreden prospects, and Anglo Coal s resources at Zondagsfonetin, Smaldeel and Beesting. It was, however, announced recently that Anglo Coal and Ingwe are rethinking their project in the Western Complex area, which will lead to new studies, involving assets from both companies. Should the establishment of such a venture go ahead, it will be an important development for the n coal industry, providing long-term coal supplies to Eskom, as well as to the export market. Situated 30 km east of Middelburg, in Mpumalanga, is the Mafube opencast mine, a 50:50 joint venture between Eyesizwe and Anglo Coal. The mine was established to supply 1,1-million tons a year to Arnot power station, which is situated some 21 km from the opencast operation. The initial cost of establishing the mining operation, known as the Mafube Micro project amounted to R26-million. While the Mafube Micro project is under way, the cash generated will allow for feasibility studies for what will be known, in due course, as the Mafube Macro mine. It is anticipated that the R1,6-billion Macro project will start in two years time with a projected tonnage of 4,5-million tons a year. The intention with future export coal is to move it abroad by using the Eyesizwe entitlement at Richards Bay. This will place Mafube in the range of mediumsized coal producers, and will see the birth of a new export colliery. The Eskom contract will be catered for at the current rate of 1,1-million tons a year. Even when the mine expands to its 4,5-million ton output, the mine will have a life of more than 22 years and employ about 1000 people. Operations Anglo Coal s Bank Colliery, situated between Witbank and Middelburg, in s Mpumalanga province, produces coal from two sections. Mechanised bord-and-pillar mining methods are used, and low-ash metallurgical and steamcoal is exported, while local sales are to the metallurgical industry. The mine produces pulverised coal injection and thermal coal for export and domestic customers. Bank Colliery is one of Anglo Coal s n export mines and, in 2004, produced 2,73-million tons of coal. The Goedehoop Colliery, situated about 30 km from Witbank, uses mechanised bord-and-pillar methods to produce coal for export and sale to the local metallurgical industry. The mine currently produces coal from the No 2 and No 4 seams for the export market. Mining takes place at a depth of between 20 m and 120 m below surface. The mine has 15

18 recently begun to develop a section known as Block 8 and, in order to transport coal from Block 8 to the processing plant, the company has constructed an eight-kilometre overland conveyor system. The mine produces pulverised coal injection and thermal coal for export customers. A small quantity of lowgrade coal is produced for the domestic market. Anglo American recently commended the mine on its ongoing battle against the HIV/Aids pandemic, in particular, to get employees to confront their HIV status through voluntary counselling and testing. Goedehoop Colliery is one of Anglo Coal s South African export mines and, in 2004, produced 6,46- million tons of coal. The Greenside Colliery uses fully-mechanised bord-and-pillar methods to mine coal that is sold both locally and abroad. The operation is situated 10 km from Witbank and has been in operation for 58 years. The mine forms part of the n Coal Estates (SACE) complex, which includes Landau and Kleinkopje mines. Greenside produces pulverised coal injection and thermal coal for domestic and export markets and prepares the coal by washing it. Greenside Colliery is one of Anglo Coal s n export mines and, in 2004, produced 2,75-million tons of coal. Kleinkopje Colliery, also situated near Witbank, exports low-ash metallurgical and steamcoal, and sells coal to the local metallurgical industry. The operation mines the number 1, 2 and 4 seams using strip-mining by dragline and has gained opencast reserves from Greenside Colliery contiguous with its own reserves that were previously partially mined by underground bord-and-pillar methods. Kleinkopje produces pulverised coal injection and thermal coal for export. Washed, sized coal is also produced for the domestic market and metallurgical coal for consumption by the local steel industry. Kleinkopje Colliery is one of Anglo Coal s n export mines and, in 2004, produced 4,69-million tons of coal. Kriel Colliery, situated about 20 km from the Mpumalanga town of Bethal, supplies coal to Eskom s Kriel power station via a conveyor belt between the mine and the generating facility. The mine has an opencast section, which is strip-mined by dragline, and an underground operation, which uses bord-and-pillar methods. Both of the sections crush the coal in preparation for use by the power station. Kriel Colliery is one of Anglo Coal s South African power generation mines and, in 2004, produced 11,06-million tons of coal. The Landau Colliery, situated 14 km from Witbank near the town of Clewer, strip-mines the Witbank coalfield by dragline and washes the coal in preparation for use. The mine exports coal, as well as selling it locally. Landau Colliery is one of Anglo Coal s n export mines and, in 2004, produced 3,47-million tons of coal. The New Denmark Colliery produces coal for use by Eskom s Tutuka power station using bord-andpillar and longwall mining. The operation is situated near the town of Standerton, in Mpumalanga, and crushes the coal in preparation for use. New Denmark Colliery is one of Anglo Coal s South African power generation mines and, in 2004, produced 4,98-million tons of coal. The New Vaal Colliery, situated between Sasolburg and Vereeniging, produces coal for use by the Lethabo power station. The coal, which is crushed, screened and washed, is transported to Lethabo over a conveyor belt. New Vaal operates using strip-mining by dragline. A portion of its reserves includes remnant pillars of the old Cornelia Colliery operation. In 2004, the mine produced 17,3-million tons of coal. Isibonelo is Anglo Coal s new colliery in the Mpumalanga province, 11 km to the north of Sasol Mining s now-closed Syferfontein openpit operation and south of what was Anglo Coal s Kriel South mine, the reserves of which are now the property of Sasol Mining as a result of the reserves-formarket deal. Isibonelo arises out of an agreement reached, in July 2003, between Anglo Coal and Sasol, to establish a new opencast operation in the northern portion of the Kriel coalfield. Sasol had been granted access through the southern portion of the coalfield through the expansion of its existing underground operations at Syferfontein colliery. Anglo Coal ceded 100-million tons of coal reserve to Sasol Mining in exchange for a contract to supply 100-million tons of coal to Sasol for the next 20 years. The deal, that was for long labelled the Kriel South project was completed on schedule and within budget, Sasol Mining s investment totalling R320-million and Anglo Coal s some R769-million. The Isibonelo mine, which has openpit reserves of 100-million tons, started production in July 2005 and is expected to supply 3,7-million tons by the end of 16

19 2005. Futher, when the mine reaches full production in 2006, Anglo Coal will supply five-million tons of Isibonelo coal a year to Sasol Mining for the next 20 years. Leadership John Wallington (Business Unit Head) Robin Berry (Chief Executive) Tony Redman (Chairman) PO Box Marshalltown Website: 17

20 Sasol Mining Nature of business Sasol Mining, a wholly-owned subsidiary of petrochemicals company Sasol, is s third-largest producer of coal, having produced 47,7- million tons in the year ended June About 10- million tons of Sasol Mining s annual production is exported through the Richards Bay Coal Terminal, in which the company is a shareholder, while the bulk is supplied as feedstock to Sasol s petrochemicals plants, which produce synthetic petrol, diesel and chemicals from coal. The coal that is used in this process is a coarse lower-grade steamcoal, with a 28% ash content. Sasol Mining operates a dedicated coal marketing office in Johannesburg to coordinate international coal marketing, sales and distribution. The largest Sasol Mining operation is in Secunda, and consists of the Bosjesspruit, Brandspruit, Middelbult, Twistdraai and Syferfontein mines, and the company has an additional mine in Sasolburg, called Sigma. Sasol Mining exports approximately 8% of the Secunda Mining Complex s production, while an export coal beneficiation plant supports the Twistdraai operations. At its Secunda operations, Sasol Mining is pursuing a strategy to establish the mines as a single integrated production unit, and the one-complex approach has enabled the company to postpone the need for large new capital expenditure to Beyond 2010, Sasol Mining is expected to implement expansions of an incremental and brownfields variety, with the exception of Mooikraal, near Sasolburg, where a new greenfields mine will be opened in Two recently- announced brownfield expansions at the Secunda operations include the ithemba Lethu coal-mine and the Irenedale coal-mine. These mines are replacement mines for the Secunda operation. The Irenedale coal-mine is the effective relocation of Bosjesspruit into the Irenedale South reserves. The R270-million project involves the blind striking of a vertical shaft to a depth of 165 m and the establishment of surface infrastructure. The surface infrastructure will consist primarily of a changehouse and office. Sinking of the main shaft is expected to begin in April 2006 and work is scheduled for completion in August By the end of 2005, the R20-million substation for the project had been completed and the R20-million water reticulation was being laid. The ithemba Lethu coal-mine, in the Zandfontein area, involves an extension of the Middelbult mine, with the new ithemba Lethu satellite shaft being a split person-and-materials and ventilation shaft. Some R140-million is to be invested in the new ithemba Lethu shaft, which will transport 600 personnel and provide ventilation. All the material excavated in the blind sink-blasting operation will remain on surface for use as a berm. It will have two 750 kw fans and surface infrastructure will consist primarily of a changehouse and office. Eskom is building a 40 MW substation to supply the new operation, which is located close to the 150-house Brendan village. Work on the project began in April 2005 and completion is expected in November Sasol Mining has selected Eyesizwe as its preferred empowerment partner, and a due-diligence exercise to assess the viability of a permanent coal-mining partnership between the two entities should be completed in 2004, with a final assessment by the end of 2005 or by the first quarter of The Kriel South project was completed on schedule and within budget, with Sasol Mining s investment totalling R320-million and Anglo Coal s some R769- million. In July 2003, an agreement was reached between Anglo Coal and Sasol, to establish a new opencast operation in the northern portion of the Kriel South coalfield, while Sasol had been granted access through the southern portion of the coalfield through the expansion of its existing underground operations at Syferfontein colliery. Sasol Mining rehabilitated its old Syferfontein strip mine and now only mines Syferfontein s underground reserves. Anglo Coal ceded 100-million tons of coal reserves to Sasol Mining in exchange for a contract to supply 100-million tons of coal to Sasol for the next 20 years. Anglo Coal s Isibonelo mine started production in July When the mine reaches full production in 2006, Anglo Coal will supply five-million tons of Isibonelo coal a year to Sasol Mining for the next 20 years. Sasol Mining will, in turn, on-sell the coal to Sasol Synfuels. However, the buying-in of five-million tons of coal a year from Anglo Coal for the next 20 years means that Sasol Mining has had to reduce the volume of coal that it mines, causing unit costs to rise, which is why Sasol Mining has introduced its Project 2010, a business enhancement strategy and operating 18

21 framework, to at least restore its previous rand-perton cost level or preferably to better it. To deal with the drop of five-million tons in production, Sasol Mining has consolidated its three Twistdraai export mines into one interconnected single operation that no longer supplies coal to the synfuels factory and only exports its coal, except the middlings emerging from the Twistdraai beneficiation plant. A deal with Eyesizwe involving Twistdraai is anticipated, as Eyesizwe is known to be keen to increase its limited export volumes through the Richards Bay Coal Terminal (RBCT), where Sasol Mining has a 5% allocation, which translates into some 3,6-million tons of coal a year as things stand at RBCT and 4,1-million tons when the terminal has been expanded. Providing a further breather is Sasol Mining s contract to supply 1,8-million tons of coal to Eskom over the next three years, until December Sasol Mining has been successfully supplying screened coal to Eskom since April 2005, and, from July 2005, at a rate of t of coal a month. Despite the deal currently maximising the value proposition for both companies, with Sasol receiving the coarse coal that it requires and Eskom the finer coal that Sasol discards, Sasol is still unsure of what will take place after the contact expires. In recent years, Sasol Mining had been supplying approximately 6 Mt of coal a year to the Sasolburg petrochemical complex. However, from February 2005, the introduction of natural gas from Mozambique, which supersedes coal as the primary feedstock for producing synthesis gas, has resulted in Sasol Mining s loss of a considerable slice of its Sasolburg market. The coal, presently only needed to operate the steam and electricity plants at Sasolburg, has since resulted in the annual coal demand at the Sigma Mining Complex dropping to about 2 Mt. However, Sasol Mining has reported that, at Secunda, the main feedstock remains coal, with natural gas from Mozambique used only when the coal gasification process is unable to keep the factory at the level of optimum production. The ratio is close to one part gas to 20 parts coal, representing a small 2% of the gas used by the factory, with 95% of the required gas still arising from the processing of coal. Owing to the fact that, at times, more fine coal is produced than consumed by the processes, Sasol Mining, together with Sasol Technology, is investigating the technical and economic feasibility of additional ways of using fine coal in the processes in order to add value to the coal mined. The main two options under investigation are fine-coal pelletisation and the introduction of high-temperature fine-coal gasifiers. Either option could be a solution to Sasol Mining s fine-coal balance problem. Sasol Mining has been developing ways of pelletising fine coal for some time. It manufactured 125 t of fine-coal pellets in a small pilot plant and established that pelletisation is technically feasible. The first hightemperature fine-coal gasifier is expected to be commissioned in Operations Sasol s mining operations in Secunda include the Bosjesspruit, Brandspruit, Middelbult, Twistdraai, and Syferfontein mines, which together, produced 445,1-million tons of coal in the year to June The mines, with the exception of Twistdraai, supply coal to Sasol Synfuels, its primary customer. The mines use bord-and-pillar methods, and continuous miners are used for pillar extraction. The coal is beneficiated through crushing and wet screening, and the coal that is for export undergoes densemedium separation. Twistdraai consists of three mines Twistdraai East, Twistdraai West and Twistdraai Central which have been combined into a single operation under one mine manager. This has resulted in the operation no longer supplying coal to the synfuels factory, supplying only export products, with the exception of middlings for sale to Sasol Synfuels, providing an opportunity for operational optimisation. The Sigma colliery, situated near Sasolburg, produced 2,6-million tons of coal in the year ended June 2005, which was supplied to Sasol Infrachem Industries (SII) plant over a conveyor belt. The mine uses opencast methods, at the Wonderwater pit, and bord-and-pillar methods underground. Continuous miners are used for pillar extraction. The coal is beneficiated by crushing and dry screening. Sigma has been the sole supplier to the Infrachem plants since 1952, but demand for coal from Sigma is set to fall drastically as a result of the introduction of natural gas to SII, which will see the shut-down of coal-fired gasifiers, and coal will be required only for steam and power generation. However, the current deployed coal reserves at Sigma Colliery will not be sufficient to supply the required coal in 19

22 the long term, and it has been decided that the most viable option is to establish a new underground operation at the mine in the Block 13 portion of the mine s reserves. Due to the locality of the Block 13 reserves, new infrastructure will have to be put in place. The proposed underground operation will be named Sigma-Mooikraal, and is situated some 18 km south-west of the SII plants. In October 2005, Sasol Mining reported that it had only spent 60% of its R229-million budget on Sigma-Mooikraal and expects to come in under budget. Sigma-Mooikraal will mine two-million tons a year with four sections and ten production shifts. Sections from Mohlolo North have now been moved to Mohlolo South, so four sections are mining in Mohlolo South. One of these sections will move over to Sigma-Mooikraal towards the end of this month where it will work alongside the section already there. The three remaining sections at Mohlolo South will continue mining until that area is mined out too, which is expected to occur around June Sasol Mining will then seal off the Mohlolo South mine and then start with the rehabilitation of the remaining Wonderwater area during July The mine has enough reserves in the Block 13 area to produce two-million tons of coal a year for the next 40 years and there are also other reserves available outside Block 13, in the Free State, that can be used if needed. The mine is expected to start delivering utility coal to the Sasolburg chemical plant in December 2005, not for use as a feedstock, but rather to supply the coal needed to raise steam and produce electricity. Leadership Paul Kruger (Chairman) Pat Davies (CEO) Private bag X1015 Secunda Website: 20

23 Eyesizwe Coal Eyesizwe Coal is a black-owned mining company with a broad beneficiary base of previouslydisadvantaged individuals, including labour unions, youth, women and developmental trusts. It has the capacity to produce 25-million tons of saleable coal a year, about a million of which are for export, making it s fourth-largest coal producer. The company was established in February 2001, having won the strongly-contested bid to acquire the New Coal assets on offer from Anglo Coal and Billiton s Ingwe Coal. These assets included four underground interests the Matla, Arnot, Glisa and New Clydesdale collieries as well as certain supply contracts with n electricity utility Eskom and some five-billion tons of coal reserves the equivalent of about 8% of s coal reserves. The company has since acquired a fifth operation, Strathrae and, in joint venture with Anglo Coal, owns the Mafube mine. The company has an t/y throughput entitlement at the Richards Bay Coal Terminal (RBCT), which it is generally able to stretch to a million tons a year. This limited allocation makes export growth a stumbling block for the company, although recent decisions on the RBCT phase five expansion are expected to improve Eyesizwe s situation. Realisation of the phase five expansion will coincide with the start-up of the Inyanda mine, a joint venture between Eyesizwe and Kumba Resources. To be developed at a cost of R186-million, this open-pit operation will be situated at Kalbasfontein, and will produce one-million tons of export quality steamcoal a year. However, Eyesizwe s relationship with Kumba is expected to be far greater than their involvement in this one project, through a proposed new deal. In terms of this, Kumba will separate its iron-ore interests from its other assets. A pure iron-ore company will house the iron-ore interests, while the company s other assets in the heavy-mineral, coal and base-metal sectors will form part of a new company, Newco, which will merge with Eyesizwe, and will have the option to take on Anglo s Namakwa Sands heavy-mineral operation, as well as 26% of the Black Mountain and Gamsberg zinc interests. The company will also have 20% in the Sishen Iron- Ore Company, which will be 74%-owned by the new pure iron-ore company, which will be called Kumba Iron-Ore. Newco will have black ownership of 58%, and will have annual coal production of 45-million. Attributable earnings of the new company will be contributed to by coal (46%), heavy minerals (24%), iron-ore (22%) and base metals (8%). In spite of the deal, Eyesizwe has not ruled out another deal with Sasol Mining, with Eyesizwe having previously been selected as Sasol Mining s BEE partner of choice. Under this appointment, it is possible that selected Eyesizwe coal deposits could become dedicated to the supply of Sasol Synfuels, and that Eyesizwe could take over the mining of selected Sasol assets and produce coal for supply to both the synfuels and other markets. It is also possible that Sasol Mining and Eyesizwe could undertake the establishment of new greenfields operations, and feasibility studies in this regard are under way. Another project under consideration by Eyesizwe is the development of a new coal-mine at Eerstelingsfontein, in Mpumalanga. Operations Eyesizwe s wholly-owned Matla colliery, located in the Kriel district of s Mpumalanga province, on the western portion of the Witbank coalfield, is an underground operation with three vertical shafts, each operated independently of one another. The mine, which employs people, is contracted to supply Eskom s Matla power station, and each of its shafts has the design capacity to supply 50% of the power station s total demand. In 2004, the mine produced 14-million tons of bituminous coal, and is known to be one of the lowest-cost coal producers in the country. Operations are mechanised, employing continuous miners and shortwall methods. Future prospects for the mine include that the mining of Matla number five seam on a joint-venture basis as an export product. At the Arnot colliery, situated 45 km from the town of Middelburg, in Mpumalanga, Eyesizwe operates an underground mine contracted to supply five-million tons of coal a year to Eskom s Arnot power station. This contract runs for the life of the power station, which is expected to extend to The mine is accessed through two shafts, in which conventional mechanised mining methods are practised. Arnot is 100% owned by Eyesizwe. Situated on the north reserve of the Arnot colliery is 21

24 the Mafube opencast mine, a joint venture between Eyesizwe and Anglo Coal. The mine was established, at a cost of about R26-million, to supply 1,2-million tons of coal a year to the Arnot power station, and a feasibility study is being undertaken to assess the viability of establishing an expanded operation on the reserve, at a cost of R1,6-billion. It is expected that such an operation could produce between 2,5- million and 3-million tons of coal a year for export, in addition to the 1,2-million being supplied to the power station. If it goes ahead, the project will have a life of about 23 years, and will employ about people. Mafube currently employs about 150 people, most of which are contractors. Eyesizwe s oldest mine, Glisa Colliery, is situated near the town of Belfast in Mpumalanga, and produces three-million tons of bituminous coal a year from opencast and underground operations. Underground mining is carried out by an independent contractor, while the mine itself conducts the opencast activities. It is expected that, through an extension to the Belfast block, Glisa will be Eyesizwe s biggest future-trade colliery. Most of the coal currently mined at this operation is sold to the domestic industrial market, and to Eskom power stations. The New Clydesdale operation produces over a million saleable tons of coal a year t of A-grade high volatile, medium-sulphur coal for the export market, and t of A-grade coal for the domestic market. The mine is an underground operation, employing over 200 people. It currently makes use of bord-and-pillar methods, using continuous miners, shuttle cars and battery cars. However, substantial experience has been gained at the mine regarding pillar extraction, which is expected to increase the operation s current reserves. New Clydesdale, which is wholly-owned by Eyesizwe, is located 140 km east of Johannesburg in Mpumalanga. it washes and sells. The mine employs 52 people, and has a mine life of two-and-a-half years. Ownership Eyesizwe Mining, owned by black-empowerment groups, holds 66% of the operating company Eyesizwe Coal. Anglo American Corporation of holds 11%, Ingwe holds 9%, and PricewaterhouseCoopers owns the remaining 4%. Number of employees Eyesizwe Coal directly employs people, and the company is indirectly responsible for the employment of 300 people. Leadership Sipho Nkosi (chief executive officer) PO Box Marshalltown Strathrae colliery, formerly owned by Xstrata, was recently acquired by Eyesizwe Coal and, due to its strategic position close to the Arnot colliery, Strathrae will be used to sustain production at Arnot, and to strengthen Eyesizwe s position as a long-term supplier to Eskom. Strathrae operates as an openpit facility, producing between and t of coal a month, and also buys about t/m of production from Mafube colliery, which 22

25 Kumba Coal Nature of business Kumba Coal is a strategic business unit of Kumba Resources, a diversified mining company with a commodity portfolio that includes iron-ore, heavymineral, base-metal and industrial-mineral assets in addition to the company s coal operations. Three collieries Grootegeluk, Leeuwpan and Tshikondeni which together produced 19,4-million tons of coal in 2004, fall under the control of Kumba Coal, which is the fifth-largest producer of coal in. Through combined capital expenditure of R418-million at the Grootegeluk and Leeuwpan mines, Kumba intends increasing its production by 1,7-million tons a year. In future, the company aims to increase output to 43 Mt/y by 2012 as the preferred supplier to the metals, reductant and energy markets. The recent announcement of the commencement of the scaled-up version of the RBCT expansion, has resulted in Kumba Resources and Eyesizwe confirming a R186-million investment into the Inyanda coal-mine. The two companies, who are joint venture partners on the project, will develop the opencast mine at Kalbasfontein, in the vicinity of Witbank, in Mpumalanga. It is expected that the mine will produce one-million tons of export quality steamcoal a year and the mine is expected to be commissioned in Once operational, Eyesizwe will be responsible for managing the mine. Kumba and Eyesizwe are further involved in another deal, which will offer an opportunity for the companies to expand their local and export coal markets, while also increasing Kumba s BEE compliance, in terms of s mining charter. In terms of this, Kumba will separate its ironore interests from its other assets. A pure iron-ore company will house the iron-ore interests, while the company s other assets in the heavy-mineral, coal and base-metal sectors will form part of a new company, Newco, which will merge with Eyesizwe, and will have the option to take on Anglo s Namakwa Sands heavy-mineral operation, as well as 26% of the Black Mountain and Gamsberg zinc interests. The company will also have 20% in the Sishen Iron-Ore Company, which will be 74% owned by the new pure iron-ore company, which will be called Kumba Iron-Ore. Newco will be the country s largest black mining firm, with an enterprise value of R16- billion and black ownership of 58%. Futher, the new company will be the fourth-largest coal producer in, with annual production at 45-million tons of coal. Kumba is also planning a three-phase expansion in the Waterberg, in the Limpopo Province, to assist in expanding the country s electricity production capacity. Eskom is considering new coal-fired power station options. Eskom has strongly emphasized that coal still has a major role to play in electricity generation. Kumba s presence in the Waterberg area could make a major contribution to the supply of s power requirements. Kumba s properties in the Waterberg have inferred resources to sustain mining for 400 years, and are said to contain some of the richest coal deposits in South Africa. The Waterberg coalfield contains more than 50% of s remaining coal reserves. Operations Grootegeluk Coal Mine, situated 25 km from Ellisras, in the Limpopo Province, is Kumba s largest operation, having produced 17,4-million tons of coal in The mine produces steamcoal, which is supplied to Eskom s nearby Matimba power station by means of a 7 km conveyor belt. The mine s other production consists of coking coal and metallurgical coal, which is sold to local and international steel and ferro-alloy plants. About tons of Grootegeluk s annual production is exported, mainly through the Durban and Maputo terminals. The mine is an openpit operation, and is one of the lowestcost and most efficient coal-mining operations in the world. All production is beneficiated at five plants, which, together, comprise the world s largest coalwashing plant complex. In October 2004, Kumba announced plans to increase production of semisoft coking coal at Grootegeluk, through the development of a new beneficiation module, at a cost of about R323- million. The t of additional production will be supplied to Ispat Iscor, in terms of a ten-year agreement. The project is expected to be completed by July Ispat Iscor will use the coal to expand its production of market coke, which it sells to the ferrochrome industry. The expansion will increase the mine s semisoft coking coal output to 2,5-million tons a year, with t/y added by the third quarter of

26 Kumba s Leeuwpan operation, situated near Delmas, 75 km south-east of Pretoria, produced 1,6-million tons of coal in 2004, and has a remaining mine-life of about 26-years. The mine produces metallurgical and steamcoal through a conventional openpit, using modified terrace configurations and truck-and-shovel operations. Most of Leeuwpan s production is sold on the domestic market, to the metals and power-generating industries, while a small portion about tons a year is exported, mainly through Matola, in Mozambique. During 2004, an agreement was concluded in terms of which one-million tons a year of thermal coal will be supplied to Eskom s Majuba power station. Kumba recently completed an expansion at Leeupan in order increase production at Leeuwpan by 60%. The project involved expanding the mine to a million tons to fuel Eskom s need for coal and is scheduled for start-up in An investment of R95-million was made to expand production at the mine from 1,7-million tons a year to 2,7-million tons a year. A jig plant will be also constructed to supply Eskom with an additional one-million tons a year of power-station coal for the Majuba power station. The Leeuwpan project has been completed and is currently being commissioned. Leadership Con Fauconnier (Chief executive) PO Box 9229 Pretoria Website: The combined growth in sales tonnage from the Grootegeluk and Leeuwpan projects will amount to 1,7-million tons a year. The 2005 half-year saw record sales to Eskom of 7,4-million tons from Grootegeluk and Leeupan with price levels remaining at high levels. The Tshikondeni mine, situated 140 km east of Musina, in the Limpopo province, produced tons of coal in The mine makes use of conventional bord-and-pillar extraction methods, and the coal is beneficiated using cyclones, spirals and froth flotation. Tshikondeni has a remaining mine-life of 12 years, and all production from the operation is sold to steel producer Ispat Iscor, at cost plus a management fee of 3% of such cost, under a long-term contract. 24

27 Xstrata Coal Nature of business Xstrata plc is a global diversified metals and mining company, headquartered in Switzerland and listed on the London and Zurich stock exchanges. Xstrata Coal, one of Xstrata plc s principal commodity businesses, is the world s largest producer of export thermal coal and a significant producer of coking coal. The company has interests in over 30 coal-mines, situated in and Australia, from which it produces more than 70-million tons of coal a year and employs about people, including contractors. The bulk of this is from its Australian operations, with Xstrata Coal South Africa contributing 19,2-million tons of production in 2004, most of which was exported, making it South Africa s sixth-largest coal-miner and third-largest coal exporter. The company s n interests consist of eight wholly-owned mines Waterpan, Boschmans, Witcons, South Witbank, Goedgevonden, Phoenix, Tavistock, Tselentis and a 50% share in a further two mines the Arthur Taylor Colliery and the Arthur Taylor Colliery Opencast Mines (Atcom) with the remaining share in these two operations being held by Total Coal. Atcom is the largest of the n operations and able to produce almost 2,5-million tons of coal per annum. Further, Xstrata Coal holds a 16% share in two Ingwe mines the Middelburg and Douglas collieries. The company has reserves in of more than 20 years at current production rates. Xstrata Coal owns an interest in the Richards Bay Coal Terminal, through which the company exports 5% of its production, primarily to the European countries of the UK, Spain and France, as well as to Israel. The company is likely to increase its exports to 80% of production with the expansion of the RBCT. Operations Xstrata Coal s operating mines exist in three divisions. The Tweefontein division includes the Waterpan, Boschmans, Witcons, South Witbank and Goedgevonden mines; the impunzi division includes the Phoenix, Tavistock, Arthur Taylor Colliery and Atcom; and the Mpumalanga division, which includes the Tselentis mine. Prior to its sale to ilanga Coal Mines, the Spitzkop mine fell under the Mpumalanga division. Xstrata Coal and ilanga have entered into a 36-month coal supply agreement, under which ilanga will supply Xstrata Coal with tons of coal each month at a predetermined price. Witbank Johannesburg Xstrata s operations Bethal Belfast Machadodorp Ermelo Swaziland Maputo Richards Bay Coal Terminal Durban Coal Terminal Company 1 Waterpan 2 Boschmans 3 Witcons 4 SouthWitbank 5 Goedgevonden 6 Phoenix 7 Tavistock 8 Tselentis 9 Spitzkop 10 ATC 11 ATCOM 12 Doutglas 13 Middelburg Open Cut Underground Railway Johannesburg Lesotho Durban The Waterpan colliery, situated on the Witbank coalfield, produced an estimated tons of coal in 2004, which was washed and screened and transported by rail and road for local and export sale. The operation consists of two double-shift drill-and-blast sections on the four-seam horizon, which continued to operate until the end of The mine s number 4 seam underground operations have since closed for a period of two years or more to prepare for development that will take the colliery down to the two-seam reserve. Mining at the Waterpan colliery currently takes place from an openpit operation, which was opened at the beginning of The Boschmans colliery produced an estimated 1,94-million tons of coal in 2004, mostly through mechanised bord-and-pillar extraction, and through a small opencast facility. Underground mining takes place at five sections, with three continuousmining sections and two drill-and-blast sections. Pillar mining on retreat is taking place at one of the continuous-mining sections. Production from Boschmans colliery is sold locally and on the export market, and the coal is washed and screened prior to sale. The year 2004 saw the completion of the underground rejuvenation project at Boschmans, which resulted in the move from cut, drill and blast operations to continuous miners as well as 25