The upgrade is part of Xstrata Coal’s recently announced $US407 million ATCOM East project, expected to ramp up in 2011.

Sedgman managing director Mark Read said the company was also in talks with Xstrata over a second part of the contract to extend the scope of services to include construction of the ATCOM Upgrade with completion by the end of 2010.

Read said today’s deal was Sedgman’s first major contract win in South Africa and would allow it to showcase its abilities in a new market and to drive future growth.

He said there was significant further contract work in the pipeline for the region which would largely be delivered through Sedgman South Africa’s expanding operations in Johannesburg.

Sedgman has already been working with Brazilian mining house Vale on its multi-billion dollar Moatize coal project in Mozambique and Riversdale Mining’s nearby Benga coal project.

The ATCOM upgrade will increase the CHPP’s capacity from 1000 tonnes per hour to 1700tph, lifting total annual production of saleable thermal coal to 3.1 million tonnes.

The ATCOM East project will create 900 new jobs during construction, with 263 permanent jobs at full production.

Sedgman Coal chief operating officer Steve van Barneveld said Sedgman had been involved in the prefeasibility planning for the ATCOM project since early 2008 and had started work on detailed design in July this year.

“Equipment vendors and fabrication resources have already been identified and will predominantly be provided by reputable South African contractors," he said.

ATCOM East was formerly part of the Douglas Tavistock Joint Venture between XCSA (16%) and BHP Billiton Energy Coal South Africa (84%). Xstrata approved the separation of the DTJV in February 2008 and XCSA will take full ownership of its 16% share of reserves and mobile equipment in December this year.

Van Barneveld said Sedgman South Africa would comply with South Africa’s Broad Based Black Economic Empowerment Act 2004 as the company ramped up its operational presence.