Universal Coal starts first thermal coal sales from Kangala in South Africa

Universal Coal has completed the first thermal coal sales from its Kangala mine in the Witbank coalfield, South Africa.

The miner has begun coal sales to South African power utility, Eskom, as part of the original coal sales agreement.

Under the agreement, Universal Coal will provide Eskom with sales from Kangala for the next eight years, with an extension in place for 16 years.

Remaining production will target the more lucrative export markets, through a 100,000t a year off-take agreement with South Africa-based Exxaro Resources.

First export sales were on track to start by July and Universal Coal has already secured export allocation through Richards Bay Coal Terminal, in KwaZulu-Natal.

The company said that Kangala is ramping up towards its nameplate capacity and is expected to reach the target by the third quarter of the year.

Universal Coal CEO Tony Weber said, "We are currently installing the DMS washing circuit on-site that will enable us to commence processing export quality coal."

Cashflow from Kangala will assist with funding the development of its next operation, the combined New Clydesdale colliery/Roodekop project, Universal Coal said.