Update 2-coal of africa shares jump after environment deal

JOHANNESBURG, Nov 12 (Reuters) - Shares in Coal of Africa (CoAL) jumped on Friday after the company reached an agreement with a provincial government over environmental issues which had

threatened its Mooiplaats mine with closure. Shares in the South African company, which slumped nearly 16 percent last week on the threat to Mooiplaats, were trading 11 percent higher at

8.70 rand by 1530 GMT, when the all-share Johannesburg market index was up 0.42 percent. In a statement issued late on Thursday, CoAl said it had reached an agreement with the Mpumalanga

provincial government that meant it would not be ordered to cease operations at Mooiplaats. Chief Executive John Wallington said CoAL had fallen victim to new South African environmental

laws that have not yet been fully implemented and which few other companies are complying with. "The law is certainly a grey area right now. The department (of environmental affairs)

knows it's uncertain and that they need to sort it out," he told Reuters. He said most of the concerns raised by the government were related to procedural matters rather than

actual transgressions of the environmental laws and would be addressed by the firm. The Mooiplaats mine has continued producing coal and should be on track to reach its annual output goal of

around 1.7 million tonnes by the end of the first quarter, he said. But analysts said environmental concerns over the firm's mines were likely to continue to affect its operations.

"Although this seems like a good outcome on the day, in reality all this noise has not helped them," Sasha Naryshkine, an analyst at Vestact in Johannesburg, said. "If you are

getting your stuff from Mooiplaats and you are worried about getting the supply you would have gone and made alternative plans." Wallington said the company had postponed plans to

obtain a full London listing until the issues relating to Mooiplats and its other project, Vele, had been addressed, but he hoped it would still happen next year. CoAL, whose shares have

fallen about 18 percent since Aug. 1, halted some work at its Vele Colliery in August after the government said they had broken environmental laws. Wallington said CoAL was addressing the

environmental concerns at Vele, near a UNESCO World Heritage Site along the Zimbabwe border, and that a UNESCO visit this month would give an indication of when construction might resume.

(Reporting by Olivia Kumwenda and Agnieszka Flak; Editing by Ed Cropley and Greg Mahlich) (For more Africa cover visit: http://af.reuters.com -- To comment on this story email:

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