South Africa-based mining company Wescoal has placed the Vanggatfontein coal mine (VGF) in Delmas, Mpumalanga, South Africa, on care and maintenance due to uncertainty over supply agreements with Eskom, the state-owned electricity provider.

The company said its current 10-year coal supply agreement (CSA) with Eskom will expire on 30 April 2022; there are 300,000 tonnes of coal currently on stockpile at the mine.

It said it had several engagements with Eskom on the extension of the CSA, which required the entire VGF resource to be dedicated to the power utility.

Eskom would be committed to accepting 11 million tonnes of coal from the VGF if it agreed to renew the CSA. The electricity provider has not yet decided to renew, according to Wescoal.

Wescoal can cut overhead costs and capital expenditure by placing the mine on care and maintenance.

"Wescoal will continue to engage Eskom to find an amicable solution to the impasse to save jobs and the economy of Victor-Khanye Municipality (VKLM) and other beneficiaries," the company said.

"VGF has a remaining life of mine of more than six years with reserves of more than 15 million tonnes."

Wescoal said its immediate plan regarding the run-of-mine stockpile is to process the coal and supply into the domestic and export market.

The washing plants at VGF will also be utilised to process coal from the Moabsvelden mine and save additional capital requirements in the short term.

The Vanggatfontein coal mine has an approximate annual capacity of 3.6 million tonnes.