Business Standard

Production hitch for JSW in South Africa

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Indian energy company ’s coal ambitions in experienced its first hitchs with a collapsed shaft set to cause the loss of a chunk of planned production.

Last month, (SACMH), a junior coal mining company is 60 per cent owned by JSW, reported a ‘fall-of-ground’ incident in its Umlabu/Mooifontein underground mining operations. While no one was injured, the continuous miner machine was trapped underground. An official communiqué to shareholders last month warned that various attempts to recover the machine had, to date, failed.

There was good news and bad news for JSW today. In an official statement to shareholders, SACMH confirmed the machine was recovered, but was significantly damaged and required major repairs. But a replacement machine has since been commissioned, and production from the underground operations recommenced last Wednesday.

In an earlier statement, SACMH said the estimated loss of production was not material because mining in the area was nearing completion. Production in the area had reduced significantly at the time of the incident.

SACMH said production lost during this period would be made up with the introduction of the replacement machine. Initial estimates were that production lost to date was in the order of 7,820 ROM (run-of-mine) tonnes from an expected 68 000 tonne ROM production of both the mine’s opencast and underground mining.

SACMH, now headed by , former head of the India desk of the Standard Bank Group and former head of Investment Banking India at Rand Merchant Bank, specialises in low-seam open cast and underground coal mining.

The company operates two coal mines in South Africa's Mpumalanga Province, the Ilanga coal mine situated in the Witbank coalfield and Umlabu in the Breyten area.

Currently SACMH has a 207,000 tonne allocation at the (RBCT). The company also holds an export allocation of 500,000 tonnes in the Phase V expansion of the RCBT.

JSW made a successful bid for a major share in SACMH in 2010, and has since advanced $19 million to fund the start-up of operations in 2011. Operations were placed on care and maintenance in early 2009 after various operational setbacks.

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