The Cabinet said it had approved the proposed model so that AEMFC could operate as a nucleus for State mining ownership.

The Cabinet added that AEMFC would contribute to key national objectives including the beneficiation of strategic minerals for industrial development and employment creation, as well as the imperative of ensuring long-term energy security.

President Jacob Zuma last year turned the first sod at AEMFC's R130-million 120-employee Vlakfontein coal mine, which is situated 100 km east of Johannesburg and 10 km north-west of the town of Ogies.

AEMFC CEO Sizwe Madondo, who was not available for comment when Mining Weekly Online called for comment on the latest Cabinet announcement, has previously outlined the State mining company's beneficiation aspirations and also spoke of the hope that AEMFC would become a top-five coal producer by 2020.

State-owned power utility Eskom, which will be requiring 250-million tons of coal a year by 2018, is the buyer of the coal the AEMFC is producing at Vlakfontein.

The fledgling State mining company, which has been granted 27 prospecting rights in South Africa, also has long-term ambitions to operate in the Southern African region and in Africa as a whole.

It is expected to play a key role in local beneficiation and dovetails with last year's Cabinet announcement of approving a ten-commodity beneficiation strategy, which sets out to leverage long-term benefits from the country's R18-trillion mineral endowment.

The Cabinet said at the time that the beneficiation strategy provided a framework capable of translating local minerals into a competitive industrial advantage.

AEMFC has been targeting minerals with beneficiation potential.

The ten selected commodities are gold, platinum, diamonds, iron-ore, chromium, manganese, vanadium, nickel and titanium, with coal and uranium bracketed together. The five value chains are energy, steel and stainless steel, pigment production, autocatalyst and diesel particulate filters, diamond processing and jewellery.

The Cabinet's approval follows South Africa's historic 2010 joint government, labour and business declaration, which was strongly in favour of beneficiation fuelling further industrialisation.

The tripartite declaration of 2010 included a joint commitment to add value in South Africa rather than export raw ore.

The Cabinet believes that its beneficiation policy presents opportunities for long-term investment, for both local and foreign investors.

"Beneficiation will leverage optimal benefit from enhanced value of exports, increasing sources for consumption of local content and contribute towards the creation of sustainable jobs," it adds.

AEMFC's 800 000 t/y 15-year-life Vlakfontein produces coal with calorific values (CV) of between 19 and 22 and not at the higher export coal CVs of 26 and 27.

The State-owned CEF provided the equity capital for Vlakfontein and AEMFC said that it did not anticipate obtaining any financial assistance from National Treasury.

Source: miningweekly.com