Multicommodity company Petmin's shares on the JSE surged by nearly 10% on Thursday, after the company announced that it would invest R120-million on a second coal processing plant at its Somkhele mine, in South Africa's KwaZulu-Natal province.

The plant, which would be commissioned by December next year, would double output at the mine to 1,1-million tons a year, up from the current 535 000 saleable tons a year of metallurgical anthracite.

"This significant organic expansion at Somkhele is an exciting step in Petmin's growth strategy reflecting both our confidence in this operation's ability to deliver increased production and our analysis of the global market," commented Petmin chairperson Ian Cockerill.

The JSE- and Aim-listed company would fund the plant through a combination of debt, up to a maximum of 65%, and own cash resources, which stood at about R230-million at present.

Petmin noted that the Somkhele mine was the second-largest metallurgical anthracite producer in South Africa, but that it would become the largest producer once the second plant was in operation.

"Our anthracite is high quality and is a cost-effective alternative to metallurgical coke in steel and ferroalloy production. Our current assessment of the market is that [the] global steel market will continue to grow in the medium-to-long term and that there will be continued substitution of anthracite for other carbon sources," commented Petmin COO Bradley Doig.

Somkhele also had a dedicated export facility of 600 000 t/y at the Richards Bay Dry Bulk Terminal and was set to grow its exports, stated Petmin.

The company's shares rose to a high of R2,69 a share on the JSE on Thursday morning, a 9,79% increase on Wednesday's close of R2,45 a share. By 13:00 its shares were trading at R2,64 a share, still up 8,16% on Wednesday's close.

Edited by: Mariaan Webb
Mining Weekly