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【Ferro-alloys.com】:United Kingdom resources firm, Contango Holdings Plc commenced production of coking coal at its Lubu Project in Matabeleland North at the back of heightened demand for the product on the local market.

Contango, a London Stock Exchange-listed entity, has a 70% interest in the Lubu coal project based in the highly prospective Karroo mid Zambezi coal basin in Hwange, while the remaining 30% is held by local partners

The mining project is expected to be the biggest supplier of coke batteries for steel manufacturing projects in Zimbabwe as well as chrome smelting operations dotted around the country.

“Stockpiles of coking coal have already been established by the Wirtgen Surface Miner, which, as previously reported, can mine at a rate of up to 1 000 tonnes per hour of coking coal,” the firm said in a market update.

“The miner continues to extract coking coal and is increasing the wash plant stockpiles further. Further studies will continue to be undertaken by the company on washed coal production to ensure optimisation.”

Contango is set to send samples to parties that indicated an interest in long-term off-take contracts including its potential partner under a memorandum of understanding which complements Contango's existing offtake for 10 000 tonnes per month of washed coal.

All coking coal produced, including coal dispatched as samples, will be sold at the factory gate, with the current Minerals Marketing Corporation of Zimbabwe price still set at US$120 per tonne.

The mining company noted that the first sales of washed coking coal are expected to be announced next month.

“This is a landmark moment for Contango. It is no small feat to bring a mine into production and something most junior mining companies never achieve," Contango Holdings chief executive officer Carl Esprey said.

“I appreciate this process has taken longer than expected, but we are now producing a high-quality coking coal product and very soon we will be a revenue-generating company. We intend on manufacturing coke at Lubu, which is expected to increase our margins from US$80/tonne to over US$300/tonne at current pricing.

“We have continued to pursue this avenue in discussions with potential strategic partners.”

• [Editor:Alakay]