Cape Town - Junior miner Coal of Africa (CoAL) [JSE:CZA] has suffered a huge setback after its integrated water-use licence for the proposed Makhado coal project has been suspended.
CoAL said the suspension comes after an appeal to the Department of Water and Sanitation submitted by the Vhembe Mineral Resources Forum, which is made of up concerned citizens, farmers and residents of Limpopo.
CoAL was granted a 20-year water licence in January as it planned to begin building the Makhado coking and thermal coal project in the second half of this year. However, the lack of a water-use licence would be a major setback for the mine which is intended to produce about 5.5-million tonnes of coal a year for domestic and export markets.
"The appeal automatically suspends the IWUL in terms of Section 148 (2) (b) of the South African National Water Act No 36 of 1998," stated the company.
"This appeal has been anticipated, and CoAL is in the process of preparing an urgent representation to the Minster of Water and Sanitation to request that the IWUL remain in full force and effect pending the final conclusion of the appeal by the Water Tribunal."
CoAL CEO David Brown said the company is actively engaging with the department to resolve the matter appropriately.
“We remain committed to the sustainable development of the Makhado Project, whilst recognising its potential to drive significant socio-economic transformation," he said.
"We will continue to engage with all stakeholders to ensure the ongoing implementation of our co-existent model, seeking co-operation between mining, agriculture and heritage land uses.”
In January when the government approved the water-use licence, 350Africa called for a climate change state of emergency and a moratorium on new water licences.
CoAL shares closed 2.08% higher at R0.49 on the JSE on Tuesday.
350Africa on Tuesday welcomed the suspension of CoAL’s water-use licence.
"This is a good start. Government now needs to ensure that there is a moratorium for new water licences and declare a climate change state of emergency," said communications manager Lerato Letebele.
She said the suspension is representative of the immense power that affected people and communities have when standing together against what 350Africa described as "an unjust cause such as the approval of a mining water licence that would lead to destruction in the area”.
Letebele explained that the mining project will cause irreversible damage to the area, including the World Heritage Site, the Mapungubwe Cultural Landscape located in Limpopo.
Initially, water was to be obtained from boreholes for the construction phase, and would be supplemented by some 4.6 million litres of water per day to be obtained from the Nzhelele Dam. The Nzhelele Dam supplies water for formal agriculture while also feeding the demand from the mine.
"The expansion of mines in the area is threatening the social, economical and ecological livelihood of the community. The vast amount of water required for CoAL’s Makhado and Vele Mine is just not feasible. Residents already lack sufficient water for basic needs," said Letebele.
Coal of Africa Limited is engaged in the acquisition, exploration, development and operation of metallurgical and thermal coal projects in South Africa.
The firm operates through three divisions: Exploration, Development and Mining. The company’s principal assets and projects include the Makhado hard coking and thermal coal project; Vele colliery; three coal projects, namely Chapudi, Generaal and Mopane, and the Mooiplaats colliery.