CANADIAN-listed Homeland Energy Group has been talking to the JSE about applying for a local listing, which could take place early next year, investor relations vice-president Naomi Nemeth said this week.
Despite turbulence in global equity markets and commodity prices, at least three other mining companies are known to have plans to list on the JSE.
Two of them, Lesego Platinum and Ridge Mining, have deferred their listings to next year because of market conditions, but junior platinum explorer Platfields, which hopes to raise R200m to fund its projects, still plans to list on the JSE in October or November this year, it said earlier this month .
Homeland said this week it had signed one-year renewable contracts with domestic buyers at over R700/ton for 500000 tons of coal a year from its Kendal mine near Witbank, which would be opened next Wednesday.
Nemeth said the price was for washed coal, which was not what Eskom was buying. Eskom tended to buy the lower quality, run-of-mine (unwashed) coal, with a lower heat value, but in large volumes, so it was impossible to compare pricing.
She said Homeland had not committed to supply Eskom at this stage but it might in future, if Eskom’s pricing came more into line with what industrial buyers were paying.
Industry sources said the price negotiated by Homeland with industrial users was typical of what was being paid in the market. They said some of SA’s smaller coal producers were eager to secure contracts to supply the local market because of bottlenecks in export logistics, although the larger producers had said they would rather leave the coal in the ground than discount prices much below export levels.
It has been extensively reported that rail capacity in SA next year was likely to fall well short of the 91-million tons of export capacity coming on stream from phase five of the Richards Bay Coal Terminal expansion.
Spot export coal prices through Richards Bay were about $152/ton earlier this month, according to McCloskey Coal data reported by Bloomberg. Spot prices are generally higher than contract prices.
Nemeth said Homeland was producing export-quality coal but had found domestic demand so high that it need not consider exports at present.
The Kendal mine, which is 2,5km from Eskom’s Kendal power plant, is ramping up to full capacity of 1,8million tons a year, of which 850000 tons will be quality, washed coal.
Kendal is one of the group’s three advanced stage projects in SA. It also has a potential opencast mine project at Eloff near Delmas in Mpumalanga, which could start producing 6-million tons a year from 2010, based on studies, and a small tailings retreatment operation at Northfield in KwaZulu-Natal.
It holds prospecting licences over three other coal properties in SA.
The group is looking for other energy opportunities in southern Africa and also has a 39% stake in Homeland Uranium , a Canadian uranium explorer in Niger and the US.
Homeland’s shareholders include management, with about 10%, BlackRock of the UK with 10% and Lawrence Asset Management of Canada with 5,5%. Management and the top five shareholders hold 42% in total.