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ARM Coal And Xstrata Coal To Develop R2.9 Billion Goedgevonden Open Pit Coal Mine

Wednesday, July 11th, 2007

African Rainbow Minerals Limited (ARM) and Xstrata Coal announced the development of a major new greenfield, open cut, thermal coal mine, Goedgevonden, at a total investment of ZAR2.9 billion (US$392 million).
At full production, the Goedgevonden mine will produce 3.1 million tonnes per annum (mtpa) of export thermal coal, 3.6mtpa suitable for the domestic thermal markets and will have a mine life in excess of 30 years. The mine is located in the Witbank coalfield, in the Mpumalanga province.
The mine will be developed through a majority black-owned and controlled joint venture, the “Goedgevonden JV”, in which ARM Coal owns a 51% share. Xstrata Coal South Africa owns the remaining 49%.
ARM Coal is a black-owned and controlled coal mining company created in February 2006 and is 51% owned by African Rainbow Minerals Limited. ARM will appoint the majority of representatives on the Goedgevonden JV management committee, in line with its majority interest. Xstrata Coal will manage the Goedgevonden Project on behalf of the Goedgevonden JV. Xstrata Coal Marketing AG will market all export coal produced by the mine.
Commissioning of the new mine is expected in the first half of 2009, with full production anticipated from 2011.
Xstrata Coal is facilitating ARM Coal’s participation in the Goedgevonden project by providing all funding required to reach commissioning. Xstrata Coal’s funding will be on preferential terms through the use of interest and capital repayment holidays. ARM Coal has been successful in obtaining 3.2 mtpa export capacity for the Goedgevonden project in the revised Phase V expansion of Richards Bay Coal Terminal.
It is anticipated the project will create over 1,100 jobs during the construction phase and 300 permanent jobs when fully operational. The Goedgevonden JV and ARM Coal will also make a significant contribution to the sustainable development of communities associated with the operation, in particular in maximizing local employment and procurement, and through supporting the development of small and medium enterprises.
Patrice Motsepe, Executive Chairman, African Rainbow Minerals, said, “We are delighted to announce the development of this major greenfield export project. This is a significant milestone for the ARM growth programme, particularly with respect to our recent investment into coal.”
Peter Coates, Xstrata Coal Chief Executive, said, “The Goedgevonden mine is the first of its kind to be undertaken by a majority black-owned and controlled company, will benefit from state of the art infrastructure and be a high productivity, low operating cost business.
“Goedgevonden will be very competitive in the Atlantic market and is well positioned to compete in the domestic thermal market, given that the JV fully complies with BEE procurement criteria. This significant investment marks Xstrata Coal’s commitment to growing our South African coal business in partnership with ARM Coal, through structures that facilitate ongoing black economic and management participation.”
Advocate Sandile Nogxina Director General, Department of Minerals and Energy, said: “The Goedgevonden project represents meaningful majority black participation in the growth of South Africa’s important coal industry. This new mine will provide an ongoing source of wealth creation for our nation for over 30 years and represents an important foreign investment for the Mpumalanga province and the country as a whole.”

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