October 19, 2011 / 7:08 AM / 8 years ago

Coal of Africa shares jump on Vele licence decision

A coal yard in a file photo. South African miner Coal of Africa said on Wednesday it was ready to begin full operations at its controversial Vele colliery in South Africa, after the government lifted a suspension of the integrated water use licence for the project. REUTERS/Nigel Roddis

LONDON (Reuters) - Shares in Coal of Africa jumped as much as 21 percent on Wednesday after South Africa lifted the suspension of a key licence at its Vele colliery, allowing the miner to press ahead with plans to start production next year.

London shares in the miner were up 11.6 percent at 55.25 pence at 0800 GMT, having touched 60 pence earlier, outperforming a sector trading flat after bullish production numbers from BHP Billiton and hopes of a euro-zone rescue.

“It’s very positive, and it is the news that we have been waiting for,” analyst Louise Collinge at Evolution said.

“Obviously there is still an appeal process that will rumble along in the background, but we knew that. What we were looking for was for them to be able to use the water while that process was under way and therefore enable them to start production.”

Coal of Africa’s water use licence for the controversial Vele colliery, which is close to a UNESCO World Heritage Site, was suspended in July after an appeal submitted by a coalition of non-governmental organisations.

The miner said on Wednesday the suspension had been lifted by the South African Minister of Water and Environmental Affairs, pending finalisation of the appeal.

Coal of Africa said it would now begin full operations and complete construction at the Vele mine. It would also begin mobilising contractors and re-employing staff immediately.

The mine will create around 500 jobs during the initial phase of operation, it said.

“We are now well placed to produce first coking coal in the first quarter of 2012, ramping up to an initial target of 1 million tonnes per annum,” Chief Executive Officer John Wallington said.

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