Teething Problems for South Africa’s Coal Mines Retreatment Plan

Feb. 6, 2013 - PRLog -- The South African Coal Report said in July 2012 Mine Restoration Investments (MRI), which had just listed on the Johannesburg Stock Exchange’s AltX bourse, believed it had the technology to produce briquettes from fines discard – a development opening up huge possibilities in Mpumalanga province where tonnes of fines discard exist.

However, MRI said in an announcement to the exchange last week there had been a delay in commissioning its pilot plant at Keaton Energy’s Vaalkrantz Colliery, citing factors including the replacement of an equipment contractor and price escalations.

Jaco Schoeman, CEO of MRI, said in a statement regulatory headwinds had also struck the project including a requirement to conduct more stringent geotechnical work. A more robust environmental impact assessment study was also required.

As a result, the project will only be commissioned in April with first production likely in July. This is roughly three months later than planned in MRI’s listing prospectus. The capital overruns will be covered by a loan between MRI and its shareholders which include Watermark Global, a company listed on London’s Alternative Investment Market, and Trinity Asset Management, a company which is headquartered in Cape Town and has long supported junior mining activities in South Africa.

However, MRI said the project’s technology seemed to check out, especially the results related to binding the briquettes: “The pilot plant work on the fines produced by the mine has indicated that the intellectual property relating to the binders to be used has produced stable briquettes which handle well and adhere to the specified requirements with regards to strength and water repulsion.”

At stake for MRI is a business equal to 10% to 20% of South Africa’s 300Mtpa in coal production. Schoeman said that was the percentage of fines produced.

“We believe we could have a market of about 13Mtpa to start with,” he said. “It’s actually a huge market. Massive.”

The pilot plant was expected to process about 5ktpm of fines  – with a plant capacity of 8ktpm. Roughly half of the R40M (US$4.7M) raised through MRI’s listing will be pumped into building the plant at Vaalkrantz.

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