MC Mining reins in Uitkomst costs, sells new coal product
The group has lowered costs by tweaking mining operations at its Uitkomst colliery, and is introducing a new high-ash thermal coal product
MC Mining has noted a fall in coal sales prices in the quarter to March, along with the first sales of a new product from its Uitkomst colliery.
Uitkomst is the sole operating asset in MC, which is forging ahead with a capital-light plan at its Makhado coking coal project.
Uitkomst’s run-of-mine coal output, which is freshly mined coal, fell by 2% to 113,190 tons in the March quarter compared with the same period a year earlier as the company bedded down fresh working practices.
MC sold 61,956 tons of metallurgical and high-quality thermal coal from Uitkomst, a 3% fall from the previous period.
During the quarter, Uitkomst made its first sales of high-ash thermal coal middlings, selling 8,315 tons of the product.
“These high-ash coal sales originate from plant modifications completed during the quarter, extracting saleable coal from the plant discard and increasing overall yield of the Uitkomst ROM (run-of-mine) coal,” MC said.
MC sells the high-ash middlings coal to a coal trader who blends it with other coal prior to sale. It is generally blended with thermal coal.
The middlings coal offset the discontinued purchases of third-party coal, which contributed 7,024 tons of coal sales in the March quarter of 2018.
“The colliery continues to evaluate potential alternative suppliers of third-party ROM coal for blending or processing,” MC said.
Sales prices fell by 14% to $75 per ton, in line with international prices.
Production costs fell by 17% to R50.17 a ton.
Giving an update on progress made at its Makhado project during the quarter, MC said it was considering a number of debt and equity funding options for the R460m first phase of the project.
The first phase will start from June this year and will deliver 2-million tons of coal that will be transported to the company’s idled Vele coking coal plant for processing.
The project will deliver 540,000 tons of hard coking coal, which is used in steel mills, and 570,000 tons of export-quality thermal coal.