One of the first things that South African exploration company Sekoko Resources did when it was launched in 2004 was to establish a solid foundation for long term growth through the acquisition of a significant portfolio of exploration interests in Limpopo Province. Six years down the line, those interests range from coal bearing properties in the Waterberg, Tuli and Mopane coal fields in the north of the province, through to platinum group metals (PGM) on the eastern and western limbs of the Bushveld igneous complex in the south, and iron ore in the Capricorn region, north of Polokwani.
“Our mission is to explore, develop and operate coal, magnetite iron ore, PGE and associated base metals mining operations with key partners, and to do this in a sustainable way,” says Moss Radingoana, VP of Corporate Support Services and Sustainable Development. For each of its projects, Sekoko’s strategy is to establish joint venture partnerships on both the financial and technological level, through which it can progress from exploration to mine development—either with a view to continuing the asset development, or for sale or IPO.
Sekoko’s flagship project is the Waterberg coal joint venture project, located on eight farms in the Waterberg coal field, an area of just under 8,000 hectares. Since announcing its partnership on the project with Firestone Energy and Uzalile Investments in 2008, exploration and development have progressed quickly.
A bankable feasibility study on the project is currently in preparation, and engineers have been appointed to design and build facilities for mining and processing coal from the proposed open pit. Environmental and engineering firm Cabanga is taking care of the environmental permitting and regulatory compliance processes, and a study is currently in progress examining the railway system for transportation of the coal to the Port of Richards Bay, either for export or for transportation to locations in South Africa. In the meantime, permissions are in place for small-scale production to commence, with delivery in the initial stages either via conveyor belt or road transportation.
“Through focused exploration, our Waterberg project is rapidly becoming established as one of South Africa’s largest undeveloped coal deposits, and long term forecasts suggest demand will increase strongly,” Radingoana says. Historically, washed coking coal from the Waterberg coal fields has been sold to the national and international steel industry, but as the recovery sets in, demand is expected to rise substantially, particularly in China, and India. “Once we reach full production we expect to produce approximately three million tonnes per annum of washed export-grade coking coal.”
Sekoko has a number of other projects at various stages of development. The Tuli coal project, for example, is still at initial exploration stage. Considerable resources are also being invested into initial exploration at two PGM projects. One, at Sekhukhuneland on the eastern limb of the Bushveld complex—the world’s largest known reserve of PGMs—is located mid-way between two well established and productive PGM mines. The exploration is being managed as a joint venture with Khumo-Bathong and Lesego Platinum and its aim is to identify geological terrains with the potential to produce several million ounces of PGE deposit at an economic grade.
The second PGM project, on the western limb of the Bushveld complex near Thabazimbi, is run as a joint venture with Peloton Capital and Nkwe Platinum. To date, the efforts have been focused on assessing, exploring and evaluating the mineral resources for commercial exploitation.
Finally, Sekoko has reached the initial exploration and pre-feasibility study phase on the magnetite iron ore project in the Capricorn region. The company is targeting an unweathered magnetite quartzite resource of between 300 million and 600 million tonnes, which is thought to be capable of producing and bringing to market 20 million tonnes of magnetite concentrate per year. “Preliminary metallurgical tests have delivered excellent results,” Radingoana says, “showing high recoveries and low contaminant levels.”
If further exploration is successful, the site could have the potential to produce economic resources of high quality magnetite iron, from which export grade iron pellets and pig iron can be produced.
Perhaps the most exciting and forward-looking of all Sekoko’s activities, however, is its examination of new sustainable technologies which could see it diversifying into oil production and power generation. The company has already committed to developing a sustainable iron ore smelter facility and export business alongside the Capricorn project, and this focus on the environment is a key element in the company’s strategic planning.
“If oil becomes too expensive, what are the alternatives? This is an important question for Sekoko and for South Africa,” Radingoana says. The issues, he believes, are threefold. Firstly, production of conventional oil has been struggling to keep pace with rapidly rising world demand, and as a result, oil prices have more than doubled since 2002. Secondly, South Africa depends on oil for over half of its consumer energy and 70 per cent of its transport energy—and most of this oil is imported. Thirdly, there is climate change. If there are economic alternatives to oil, will they be environmentally acceptable?
“To address this question, we have commissioned a ten-month feasibility study exploring the development of an integrated standalone greenfield coal-to-liquids (CTL) and co-generation power facility that would produce approximately 50,000 barrels of synthetic fuel and 300 megawatts of power per day based on our coal assets at the Waterberg project.”
CTL is a proven technology capable of converting coal into gas and synthetic fuels, and the associated combined-cycle power units have been shown to produce around 20 per cent less CO2than conventional coal fired plants—a figure that can be further reduced with carbon capture technology. However, the company believes that future generations of carbon capture technology could potentially reduce CO2 emissions to zero, and it has therefore commissioned a team of consultants to explore the possibilities of future technologies.
Keen to play a part in securing South Africa’s energy independence while taking strides to reduce its environmental impact, Sekoko is currently examining the options for financing a private greenfield combined CTL/power project in South Africa, including possible risk sharing arrangements with the national power company Eskom. If successful, such a harnessing of locally produced coal and new technology could pave the way for a greener and more secure future.
