Universal Coal has started production at its Kangala mine in the Witbank coalfield, South Africa.
The company expects to deliver its first coal in March, as per the two million tonnes per annum (Mtpa) offtake agreement with South Africa's power utility, ESKOM.
Located in the Mpumalanga province, Kangala is now preparing for a nameplate capacity of 2.4Mtpa, of which 2.1Mtpa is saleable.
Universal Coal CEO Tony Weber said the move marks a significant milestone, as the company progresses towards becoming a mid-tier coal producer.
"Kangala will provide steady and strong cashflow for the decade to come, laying the foundation for further growth in helping to fund the progress of our pipeline of quality coal assets, including our next operation, Roodekop/New ClydesdaleColliery," Weber said.
In October 2013, Universal Coal started mining of the first run of mine coal at the Kangala mine, which is the company's first thermal coal operation.
The project features three properties, namely Wolvenfontein, Middelbult and Modderfontein, and contains thermal coal largely suitable for the domestic power generation market.
After completing the Kangala project, Universal Coal said it will develop the export-focused Roodekop project, which is located near Exxaro's New Clydesdale Colliery (NCC).
Universal Coal has signed an agreement to acquire New Clydesdale Colliery, which it says will fast-track its progress towards becoming a multi-mine producer.
The company said it is in the process of finalising legal agreements and regulatory processes with Exxaro and will update the market in the near future.
Universal Coal has five coal projects in South Africa with 1.9 billion tonnes of joint ore reserves committee resources, covering thermal and coking coal, of which more than one billion tonnes is attributable to the company.
Image: Kangala is now moving towards nameplate capacity of 2.4 Mtpa. Photo: courtesy of FreeDigitalPhotos.net.