Date: 21 May 2015 By: Isabel Venter
The mining company Coal of Africa Limited (CoAL) is one step closer to opening its flagship project, the Makhado Mine.
This follows an announcement by the company that it has been granted a mining-right licence by the Department of Mineral Resources to mine coking coal from the project. The proposed mine will be situated approximately 65km southwest of Musina, and if it becomes a reality, it will surround the indigenous Mudimele community.
For CoAL it has been a four-year struggle to obtain the licence and meet the government’s requirements.
CoAL’s chief executive officer, Mr David Brown, said the Makhado Mine would benefit the impoverished communities of Limpopo both socially and economically. If all goes according to plan, CoAL will begin with the construction of the mine next year.
There are, however, several more hurdles to be crossed by CoAL before they can meet this deadline.
According to Brown, the two biggest hurdles include an outstanding water licence, as well as a comprehensive environmental impact study.
Towards the end of last year, the Vhembe Mineral Resources Stakeholders Forum (VMRSF) obtained a court order, thwarting CoAL’s plans for the Makhado project. It is because of the court order that CoAL now needs to compile a new environmental impact study.
The VMRSF is an umbrella organisation, consisting of various communities from across the province, whose sole purpose is to stop CoAL from mining the area. Their chairperson, Mr Philé van Zyl of the ZZ2 farming conglomerate, said CoAL brought the quality of the water in the Njelele River, the ground water and food production under threat. He and the forum are of the opinion that CoAL’s environmental history leaves much to be desired, and that the company has several black marks on their record when it comes to environmental laws.
“CoAL has transgressed so many rules, regulations, instructions and even their own promises, which makes the granting of the [mining] licence laughable,” said Mr Johan Fourie, a member of the VMRSF and a land owner near the proposed area of the Makhado mine.
According to Van Zyl, the forum has already started with processes to get the department to reconsider their granting of the licence. If the licence is not retracted, said Van Zyl, they will take CoAL to court again.
In the meantime, the new licence was welcomed by CoAL who was, according to various business media reports, struggling to cope financially.
CoAL's ability to keep afloat depended in part on raising $12-million (R142-million) in April this year, the company said in its December interim results statement. CoAL also still owes $22.5 million for land it bought from Rio Tinto for another potential coal mine project it plans to develop. This had to be paid in September last year.
Following Monday’s announcement, CoAL’s stock prices soared higher than they have been in a long while. Shares jumped as much as 69%, CoAL’s biggest gain since starting to trade in December 2006.
Isabel joined the Zoutpansberger and Limpopo Mirror in 2009 as a reporter. She holds a BA Degree in Communication Sciences from the University of South Africa. Her beat is mainly crime and court reporting.