UPDATE 1-SAfrica mulls halt Coal of Africa mine development

* Government to investigate mine over environment laws

* No date cited for government decision

(Adds details, background)

CAPE TOWN, July 30 (Reuters) - South Africa said it was concerned Coal of Africa's (CZA.AX)(CZAJ.J) Vele mine was carrying out illegal activities and that it may halt development at the colliery if the company has flouted environmental laws.

Minister of Water and Environmental Affairs Buyelwa Sonjica said on Friday the government would investigate whether Coal of Africa had fulfilled enviromental laws in order to decide whether to halt development of the mine.

"We are concerned about the illegal activities that the company embarked on when this matter was still under discussion, and really that is the main concern that we have," Sonjica said.

She said there was no indication when the government could make a decision concerning the mine, which is expected to cost 2.1 billion rand ($285.9 million) over three years.

Last month Sonjica also raised concerns that the proposed Vele coal mine might increase pollution and hurt the Mapungupwe Heritage site, which also is located close to the Kruger National Park, the country's premier national wildlife park. [ID:nLDE6500QU]

Coal of Africa said in April it expected construction at Vele to be completed early in the third quarter of 2010 amid improved international and domestic coal markets. [ID:nWEA8539]

South Africa is one of the world's top coal exporters, and the Vele colliery in Limpopo province has an estimated 721 million tonnes in situ resource.

Sonjica said her concerns had been brought to the attention of the minister of mineral resources, who has taken a site visit to verify the allegations against Coal of Africa.

The company has not yet been formally alerted to the government's concerns, although individual company officials were informed, she said.

"(We are) still working towards a formal meeting with them, so that that I can formally raise the issues with them." (Reporting by Wendell Roelf, editing by Jane Baird)