South African coal. Credit: © South32.

Australian mining and metals company South32 has approved the R4.3bn ($301M) Klipspruit life extension project (KPSX) at South Africa Energy Coal (SAEC).

The company noted that development activity is anticipated to begin in the current quarter with first coal expected from the open-cut operation in 2019.<

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South32 CEO Graham Kerr said: “Approval of the R4.3bn Klipspruit life extension project will secure the future of the colliery for at least another 20 years, ensure employment for 740 people and create 4,000 jobs during construction.

“The investment is expected to generate an internal rate of return (IRR) on investment of more than 20% by unlocking 616Mt of resource at the Klipspruit South and Weltevreden deposits, and fulfilling around half of our current rail obligations with Transnet.”

“Approval of the R4.3bn Klipspruit life extension project will secure the future of the colliery for at least another 20 years.”

The company expects to stop production from the Klipspruit project in 2020 in the wake of depletion of coal reserves.

It holds a 92% interest in SAEC, with the remaining 8% held by a broad-based black economic empowerment (B-BBEE) consortium.

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The company revealed that it will concurrently manage SAEC as a standalone business from next April.

South32’s $301m investment is aimed at extending the life of the Klipspruit colliery by around 20 years.

According to the company, SAEC needs ongoing investment to sustain production.

The company is also planning to restructure SAEC to improve its financial performance.

After the exercise to establish SAEC as a standalone entity is completed, South32 will begin a process to broaden its ownership in an attempt to secure a listing on the Johannesburg Stock Exchange.