Project update: Makhado steelmaking hard coking coal

MC Mining’s flagship Makhado steelmaking hard coking coal (HCC) project has the required regulatory approvals and surface rights over the mining and processing areas and is ‘shovel ready’.

The development of Makhado is expected to deliver positive returns for shareholders and position MC Mining as South Africa’s pre-eminent steelmaking HCC producer resulting in obvious advantages for domestic steel producers.                                                                                                           

The development of Makhado is also expected to have a positive impact on employment and the general Limpopo province economy resulting in the creation of approximately 650 direct jobs.

An owner’s team was appointed in Q1 FY2023 to drive the planning and development of the Makhado Project.

The Makhado coal handling and processing plant (CHPP) optimisation study was completed by independent experts, resulting in the annual capacity increasing from 3.2 million tonnes per annum (Mtpa) to 4.0Mtpa.

The Company subsequently appointed Erudite (Pty) Ltd (Erudite) to complete the detailed designs for the Makhado CHPP.

Implementation Plan

• The five-year Makhado Project implementation plan (Implementation Plan) was completed in April 2023 with the goal of improving the accuracy of Makhado feasibility studies from ±30% accuracy to an estimated accuracy of ±10%; and
• The Implementation Plan is for the first five years of production and includes a detailed execution plan for the construction of the East Pit and related infrastructure and a detailed mine plan.

Engineering and operational tenders

• Erudite are in the process of completing the detailed designs for the Makhado mine infrastructure and CHPP and commenced obtaining detailed execution quotes for the construction of the CHPP;

• This process is expected to be finished in H2 CY2023 and will also cater for the enlarged mining and processing footprint;

• Makhado will be contractor-operated. During the Period the Company initiated the managed tender processes to select a mining contractor, CHPP operating contractor and the analytical laboratory operator. These processes are expected to be completed in H2 CY2023; and

• First coal production is expected 18 months from commencement of construction, which is expected during H1 CY2024.

Early works

MC Mining Board approved the commencement of early works of ZAR71.3 million ($3.9 million), ZAR45.0 million ($2.4 million) for placement of orders for long lead items and a further ZAR55 million ($3.0 million) for electricity supply infrastructure. Various work streams commenced during the period.