INCE CONNECT / 19 JUNE 2019 - 15.05 / STEPHEN GUNNION
ArcelorMittal SA will replace imported hard coking coal with coal from MC Mining's Makhado project once it's up and running.
MC Mining has signed an off-take agreement with ArcelorMittal South Africa (AMSA), which will see the steelmaker buying hard coking coal (HCC) from Phase 1 of its Makhado coking coal project in Limpopo. It says the deal reaffirms the quality of its coal and follows a purchase agreement with China's Huadong Coal Trading Centre for the uptake of 450,000 tonnes a year of Makhado's HCC.
Makhado is MC's flagship project and, once developed, will be the only significant hard coking coal mine in the country, producing up to 800 000 tonnes of HCC annually as well as between 900,000 and one million tonnes of export quality thermal coal. The project will provide significant direct and indirect benefits to communities located in an area with high unemployment. It's expected to create approximately 650 permanent job opportunities.
Currently, AMSA has to import HCC to produce its steel. Under the deal with MC, it will purchase a minimum of 350,000 tonnes of HCC a year from Makhado Phase 1 and has the right to acquire a further 100,000 tonnes a year. The agreement is for the shorter of ten years or the Phase 1 life-of-mine. The deal is subject to the confirmation by 15 December that funding has been secured for the development of Phase 1, with delivery of the coal expected to start a year later.
Construction of Phase 1 of the Makhado project is expected to start before the end of September and will take nine months, followed by a one-month ramp-up. Construction for Phase 2 of the project is only expected to start in 2022.
The signing of the Phase 1 HCC off-take agreement with AMSA is a massively positive step for Makhado," CEO David Brown said. "MC Mining is now positioned to become South Africa's pre-eminent producer of high-grade metallurgical coal and the Makhado coking coal will partially replace coking coal currently imported."
Its shares fell 9.9% to R7.43 in a single trade late yesterday afternoon.
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