GlencoreXstrata Pushes South African Coal Production to 60 Million Tons

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--GlencoreXstrata (GCX) (LSE:GLEN.L) (Baar, Switzerland) will increase its supply of South African coal to the national power utility Eskom and the export market. The company expects to see new coal production of 60 million tons per year, with an investment of $1 billion.

This was conveyed in a presentation to analysts in Johannesburg a few days after the company made a high-profile secondary listing on the Johannesburg Stock Exchange. At the time, Ivan Glasenberg, the chief executive officer of GCX, said that the listing fitted the group's track record of investing in Africa.

The company said that the first production from the coal project pipeline was being implemented with 17.2 million tons per year of coal. The balance of new production will be brought on stream between 2015 and 2021.

The $94 million Wonderfontein project will extend the life of Umbeco, which the company bought in 2011. The major $843 million investment will be in Tweefontein, in which GCX holds 79.8%. This mine will add 13.6 million tons per year run-of-mine production from the fourth quarter of 2014.

GCX has increased its saleable coal volumes in South Africa from about 5 million tons in 2010 to about 45 million tons per year currently, of which 20 million tons per year came from GCX's merger with Xstrata.

Total saleable coal was 49 million tons per year, including managed tons. GCX is a 31.7% shareholder in the 91 million-ton-per-year Richards Bay Coal Terminal on South Africa's northeast Indian Ocean coast.

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