Coal of Africa said it has halted production after a derailment in Maputo, Mozambique, which had a negative impact on the transportation of resources.
Rail traffic between Komatipoort and Maputo was suspended after the derailment of 10 wagons forced the company to temporarily stop some of its operations.
"The existing stockpiles at Vele are at full capacity and have resulted in the temporary suspension of production," the company said.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"This suspension will preserve cash resources by reducing costs as the colliery is currently in developmental and product testing phase."
Production will resume within the next 24 hours once the Transnet Freight Rail recommences on the network.
Output at Mooiplaats and Woestalleen will continue until stockpile capacity is exhausted.
The group's subsidiaries Limpopo Coal Company, the holding company for the Vele colliery, and NuCoal Mining, the holding company for Woestalleen, have issued force majeure notices to their customers, contractors and other affected stakeholders.
"The company will implement measures at all operations to mitigate the commercial and operational impact of this force majeure," the firm said.
In the second quarter of 2013, the company reported production of 1,153,486 tonnes run of mine coal of which 194,495 tonnes was produced by the Vele Colliery.
Coal of Africa exported 411,297 tonnes for sale. It sold 418,355 tonnes to the domestic (inland and Eskom) market in the same period.
RD
