Activity in the coal space is picking up, with two ASX-listed juniors closing in on construction and production.

Cokal (ASX:CKA) has received the funding it needs to build the first stage of its 60 per cent owned Bumi Barito Mineral (BBM) project in Indonesia.

Singapore-based Aahana Global Resources & Investment has agreed to fully fund the project in exchange for a 40 per cent stake.

This will allow Cokal to accelerate its path to production, with first coal to be delivered in the final quarter of this year.

Shares gained over 8 per cent to trade at 4c by midday on Wednesday.

The first stage will produce about 600,000 tonnes each year of pulverised coal injection (PCI) coal for total saleable coal of about 4 million tonnes.

PCI is a method for improving the performance of a blast furnace used for smelting to produce industrial metals and alloys, generally iron, but also others such as lead or copper.

The larger second stage will produce coking coal, a key ingredient in steel, starting in about 18 months.

Earlier this year Cokal hit a roadblock in its negotiations for a fair price for its coal from a Chinese trader.

The company had been trying to square away an agreement with Renjian International Trading (Shanghai) Co to supply 2.5 million tonnes of premium PCI coal from the BBM project.

Coal demand strong

While Cokal does not yet have in place any supply agreements, non-executive chairman Domenic Martino is confident the company can supply to the top trading houses in Japan and top steelmakers in China.

“We’ve sent samples through to Korea, Japan and China in the sense of getting offtakers and customers for it and there is absolutely no problems selling the coal,” he told Stockhead.

“We haven’t signed up any offtake agreements yet, but what we have are expressions of interest from both Japanese and Chinese parties to take all the product.

“There is a great demand for PCI and coking coal.”

Mr Martino said the coking coal price is “probably the best it has been for a few years” at around $US200 a tonne and PCI is currently fetching about $US140 to $US150 a tonne.

Aahana will also subscribe for $1 million Cokal shares at 3.2c apiece.

Doling out the contracts 

Resource Generation, meanwhile, has signed on mining infrastructure specialist Sedgman to build the coal handling and preparation plant for its Boikarabelo mine in South Africa.

The news sent shares up nearly 24 per cent to an intra-day high of 4.7c today.

Resource Generation (ASX:RES) shares over the past 12 months.
Resource Generation (ASX:RES) shares over the past 12 months.

Sedgman will be responsible for designing, building and operating the plant for four years.

The contract is worth $US310 million to Sedgman.

Resource Generation is aiming to produce 6 million tonnes each year of saleable coal during stage one of the Boikarabelo project.

The company has also received an extra $US2.5 million by way of a loan from major Singapore-listed commodities trading house Noble Group.

The funds will tide Resource Generation over until it can secure project funding.

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