Sedgman South Africa has secured a front end engineering and design (FEED) contract for the plant modification project at Coal of Africa’s Vele Colliery in the Limpopo province.

Coal of Africa (CoAL) said the modification and expansion of Vele Colliery beneficiation plant will allow it to optimally produce three coal products that include semi-soft coking coal, thermal coal and sized coal simultaneously, at an anticipated processing capacity of 2.7 million tonnes of run-of-mine (ROM) per year.

The three month planned FEED process will allow CoAL to arrive at a class one EPC estimate.

"We are currently focused on finalising off-take agreements and obtaining project finance for the plant modification."

Under the contract, Segdman will establish the process and engineering design parameters for the plant modification from the results of exploration infill drilling, coal quality testing and analysis carried out during the past 12 months.

CoAL said a sample of semi-soft coking coal was sent to ArcelorMittal South Africa in September 2013 for metallurgical coal trials, which yielded positive results and the parties are negotiating an off-take agreement.

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Segdman will identify and improve sections of the existing plant to ensure a 500t per hour throughput capacity.

The scope of work also includes a stockpile management philosophy and associated design, a ROM handling, crushing and screening section, a de-stoning wash plant and a sized coal screening plant.

CoAL chief executive officer David Brown said the company continues to make significant progress in the execution of its five-point turnaround strategy.

"The appointment of the FEED contractor as well as the recent product quality confirmation by ArcelorMittal South Africa have been crucial achievements for the project," Brown said.

"We are currently focused on finalising off-take agreements and obtaining project finance for the plant modification, and are confident that this will be concluded within our committed time lines."

The construction of the plant modification is anticipated to be completed during the first half of 2015 followed by a production ramp-up phase.