Firestone Energy Limited is a mineral and coal exploration company that is listed both on the Johannesburg Stock Exchange (JSE) and the Australian Stock Exchange (ASX). The company is a shareholder in the Waterberg Coal Project (WCP), which is a project to develop a large reserve of coal in the Waterberg district, South Africa.

The Waterberg Coal Project started development to produce coal for Eskom, South Africa’s parastatal power utility. SRK Consulting was tasked to compile a feasibility study on the proposed development of an opencast coal mine in 2012. The initial study found that such a mine would be able to supply Eskom with ten million tonnes of coal per annum, for thirty years.

Further studies found that the initial coal resource of 1.183 billion tonnes was a vast understatement. After completing a more comprehensive drilling and exploration programme over the entire area of the WCP, Ardbel stated that the entire coal resource amounted up to 3.88 billion tonnes of coal. Ardbel also optimised the materials handling process, as well as the coal washing plant, which reduced the amount of capital needed to get mining started by a significant margin.

Part of the optimisation project was to get permission from the Exxaro team that operates Grootgeluk Mine, which neighbours the WCP, to share infrastructure such as roads and powerlines. With such an agreement in place, initial start-up costs for the proposed opencast mine would be decreased by a great deal.

After receiving the updated resource report and the optimised mining plan, Eskom asked Firestone Energy to extend the proposed thirty year coal supply by another ten years. Firestone agreed to this request from Eskom, but Eskom still haven’t given the go-ahead for Firestone to start producing coal for the power utility. Due to the lack of commitment from Eskom, Firestone voluntarily suspended their share trading on the JSE, until such a time that Eskom commits to the project. Without the power utility’s buying power, the WCP has not yet come off the ground.

With the recent revelation that South African electricity provider, Eskom, has basically run out of coal to keep its power plants in operation, the development of the Waterberg Coal Project will most likely receive new funding. For as long as South Africa is reliant on fossil fuels to produce electricity, coal will be in major demand across the country. So even with the dip that the coal market has experienced over the last couple of years, it seems likely that it will start to pick up soon, in order to cater for South Africa’s energy crisis.

Mining

Petroleum Industry

Coal Mining

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