Baobab Mining and Exploration, a subsidiary of MC Mining (previously Coal of Africa) has secured it first off-take agreement for the Makhado project in Limpopo province, South Africa.
The off-take agreement will ensure that the company’s hard coking coal and thermal coal products has a destination for at least the next three years. Makhado is expected to produce up to 800 000t of hard coking coal annually, as well as between 900 000t and a million tonnes of export quality thermal coal.
MC Mining recently signed the agreement with Huadong Coal Trading Center (HDCTC), a Chinese state-owned enterprise and a subsidiary of the China Forestry Group Corporation. Site works at Makhado ARE expected to get underway by 30 June 2020. It is envisaged that the coal will be sold free-on-board (FOB) at the Matola Terminal in Maputo, Mozambique.
South Africa produces significant quantities of thermal coal, primarily used for heat, steam and electricity generation, sold to domestic and export customers. However, the country has a very limited domestic supply of high-quality metallurgical coal resulting in coke producers having to import coking coal for the manufacture of metallurgical coke. This coke is used in furnaces with iron ore and a flux (lime) to produce pig iron (steel).
It is anticipated that the balance of Makhado’s HCC production (not sold to HDCTC) will be sold domestically.