Diversified mining company Exxaro Resources has entered into a prospecting joint venture agreement with Sasol Mining to develop a coal mine to supply Sasol’s proposed inland coal-to-liquids (CTL) project in South Africa.

The Mafutha CTL project, which is in the pre-feasibility stage, is located in the coal-rich Waterberg region in the north-western part of the Limpopo province.

The 80,000 barrels a day CTL complex will meet the growing shortfall in domestic fuel production, especially refined fuels such as petrol and diesel, which are largely imported.

Exxaro will adopt an opencast truck-and-shovel extraction method at the mine, if it goes ahead.

Exxaro will mine a bulk sample before the end of 2009 and will send about 170,000t of coal for large-scale testing to Sasol’s Synfuels Secunda plant.

The joint venture is subject to regulatory approvals, Exxaro said.