Somkhele is a high-quality anthracite deposit in the KwaZulu-Natal Province, located approximately 85km north-east of Richards Bay. It was acquired in December 2005 as part of Springlake Holdings and the mine was commissioned in June 2007.
Somkhele is divided into five areas and is underlain by four coal seams. The main seam (B) is up to 13.5m thick (inclusive of partings). Petmin has mining rights for three areas covering 780ha together with prospecting rights for further areas (4 and 5) covering 23,027ha. An exploration drilling programme in Areas 4 and 5 has yielded promising results in the initial phase and is being accelerated.
Prior to 2000, standard diamond drilling was employed by previous mining companies at the opencast Somkhele site, which produced core loss in coal seams as high as 39%. This unusually high level of core loss was caused by the highly cleated nature of the coal seam. This issue has been overcome by the triple tube core barrel method used by the Afriore Group and Springlake Holdings. This method has improved core recovery to almost 100%. Shortcomings of the exploration methods employed prior to 2000 prevented Somkhele from being developed as quickly as might have been expected having regard to the quality of the anthracite.
Mining in Area 2 started in the first quarter of 2007 and is being carried out through a series of mini pits (A to E). Opencast drill and blast procedures are being used. The plant has a nominal capacity of 1.44 million run-of-mine (ROM) tonnes a year.
Somkhele has a life of mine of 15 years at a ROM rate of production of approximately .84Mtpa in FY2008, increasing to 1.9Mtpa by 2011. There are mineable in situ resources of 51.2Mt.
Somkhele anthracite typically has a low sulphur content (0.6% to 0.7%) and low phosphorus contaminants (<0.01% in seams B1 and B3, and 0.018% to 0.022% in seam B2, producing a weighted average of 0.015%). It also displays low volatiles. The characteristics of Somkhele anthracite, which are rare amongst South African coals, should comfortably meet domestic and export market requirements. In addition, with its low sulphur and phosphorus content, Somkhele anthracite can be used as a reductant in titanium and ferrochrome smelters enabling Petmin to take advantage of opportunities in these metallurgical markets.
Somkhele anthracite's high vitrinite content is expected to result in superior graphitisation and conductivity from the calcined material at high temperatures. Due to its high rank and high vitrinite content, Somkhele washed and sized products are expected to be suitable for use as stand-alone smokeless fuels.
As Somkhele anthracite is a natural blending partner for Springlake anthracite resulting in a blended product with total sulphur content close to 1% (that is, a lower sulphur content than the unblended Springlake anthracite), a blended Somkhele/Springlake product will enhance Petmin's ability to target the ferrous metals market. Somkhele is also geographically well-positioned near to South Africa's major titanium smelters which should assist the Group in maintaining competitive supply prices.
The array of products from Springlake and Somkhele could enable the Group to reach a minimum 50% share of the South African anthracite market (excluding the low-smoke/smokeless fuels segment of the market) within 18 months of Somkhele coming into production. Somkhele is well positioned to access export markets, particularly in view of the site's proximity to Richards Bay. Petmin has recently secured a five-year agreement to export a minimum of 150,000 tonnes to March 2008, and thereafter a minimum of 300,000 tonnes, via a specialised facility at the Richards Bay Dry Bulk Terminal.
The Group is evaluating options for the establishment of a railway siding - various sites are being considered. Such a siding would be used for stock piling, loading and onward transportation. Construction of the siding is currently expected to be completed before Somkhele reaches full production in 2010. Until the establishment of the siding, products will be transported by road to Richards Bay for export or to domestic customers. Electricity is supplied by Eskom while water comes from dams built on site and ponds, with the local municipality providing a back-up supply.
© 2008 Petmin Limited
The Somkhele Colliery poses a real opportunity to make a meaningful contribution to the local community
