South Africa: MC Mining’s Coal Production up by 12% during Jan-Mar’20 Quarter

MC Mining is a listed coal exploration, development and mining company operating in South Africa. The company has key projects including Uitkomst Colliery (metallurgical coal), Makhado Project (hard coking coal), Vele Colliery (semi-soft coking and thermal coal), and the Greater Soutpansberg Projects (coking and thermal coal).

The company has released its results for the quarter ended 31 March 2020 and the coal production at its Uitkomst mine rose by double digits during Jan-Mar’20 also known as Q3 FY20, despite slightly fewer days of production due to the start of SA’s lockdown. South Africa’s fiscal year starts from 1 July and ends on 30 June.

The coal production at Utikomst mine for Jan-Mar’20 quarter was 12% higher at 127,122 tonne against 113,190 tonne produced in the quarter ended March 31, 2019. The higher output was achieved despite the loss of about 8,000 tonne of RoM coal production owing to the lockdown.

The lockdown has since resulted in the colliery being placed on care and maintenance and has also impacted on activities at the company’s development projects in Limpopo.

MC Mining relies on the Uitkomst mine for cash generation, but its priority is its flagship Makhado project, which will produce coking coal and thermal coal once production begins.

The company’s management anticipates that the process to secure the balance of funding required to start development of Phase 1 of Makhado will be completed in the second or third quarter of this calendar year, with construction to start shortly thereafter.

The miner’s Vele semi-soft coking and thermal coal colliery remained on care and maintenance during the quarter, but its processing plant is expected to be refurbished and recommissioned as part of Phase 1 of the Makhado project when financed.

Additionally, sales of high-grade metallurgical, thermal and high-ash middling coal were 4% higher than the comparative period, at 72,942 tonne in Q3 2020 versus 70,721 tonne in Q3 2019. The sales for the quarter of high-grade metallurgical and thermal coal were 64,264 t while 8,678 tonne of high-ash middling coal were sold.

Average sale price

The slowdown in the global economy during CY2019 resulted in a decline in metallurgical and thermal coal prices. However, average premium HCC prices improved to USD 149/MT during the quarter, 8% higher than the preceding December 2019 period (FY2019 Q3: USD 203/MT).

Demand for South African coal remained robust and the average API4 price for the Quarter was USD 79/MT, slightly lower than the USD 83/MT recorded in Q3 FY2019 (FY2020 Q2: USD76/MT).