South African coal beneficiation and future supply of beneficiated coal for energy generation received a significant boost with the acquisition and development of a coal beneficiation hub in the eMalahleni district in Mpumalanga. Lurco Group and Burgh Group Holdings concluded a sale and purchase agreement (“SPA”) for Lurco & Burgh to acquire the Inyanda Colliery (including the mining rights, assets and a private rail siding) from Exxaro Coal with the distinct purpose of enabling coal beneficiation for Eskom energy generation and international export.
The acquisition marks a significant step for energy coal beneficiation and Lurco foresees the beneficiation of more than 25 million tonnes of coal for the local and international export market over the next five years from the Inyanda Beneficiation Complex. The beneficiation hub is ideally located in the heartland of the Highveld coal fields and will add significantly to the country’s coal beneficiation infrastructure.
The acquisition will sustain employment following the recent depletion of the reserves at Inyanda Colliery, boosting mining transformation and supporting national beneficiation as described in South Africa’s Mining Charter.
What it means
“This acquaition enables us to meet significant demand for quality coal, both locally and abroad. We will source, beneficiate and move coal from our own reserves, that of the Burgh Group as well as other reserves in the eMalahleni coal fields,” states Ellington Nxumalo, Chief Executive Officer of Lurco Group. “Our coal beneficiation hub supports and strengthens our integrated coal business offering across the entire coal value chain from sourcing, beneficiation, logistics to supply for export and domestic use,” says Nxumalo.
“The beneficiation plant is centrally located in the eMalahleni district and has the benefit of the Blackhill private rail siding. Having the private rail siding brings additional logistics value and opportunity for Lurco, especially with the adoption of the road to rail integration plan as announced by Transnet Freight Rail,” explains Nxumalo. “The private and fully compliant siding provides excellent access to freight for our export of coal.”
“We are very pleased about this transaction,” states Sipho Nkosi, Exxaro Chief Executive Officer. “Lurco and their leadership team understands the entire coal value chain and are well positioned to continue to operate successfully in this region. Inyanda was one of Exxaro’s flagship mines and now after depletion of the Kalbasfontein and Pegasus South coal reserves, the well-maintained infrastructure will continue to generate value in the hands of Lurco and Burgh, and be put to good use for beneficiation. The deal is commercially sound based on solid business merits,” states Nkosi.
Nxumalo explains that the Lurco and Burgh joint venture is built on a strong shared business vision.
“Lurco Group and Burgh Group Holdings are the ideal partners for this venture. We share an energetic and entrepreneurial business approach. Both companies understand the coal mining business well and we see a very exciting and prosperous future for this joint endeavour,” adds Quinton van der Burgh, Chief Executive Officer of Burgh Group Holdings.
The SPA was concluded with Exxaro as seller and Main Street 1394 (owned jointly by Lurco and Burgh Group Holdings and majority black-owned) as the buyer.
All the parties to the SPA pride themselves on their quest to run safe and sound operations with a commitment to honouring all the environmental obligations as part of this transaction.