An Australian mining company, African Energy is looking to revive a deal with South African power authority, Eskom by supplying coal from the Mmamantswe coal fields. According to a shareholder update, the company has put forward a proposal to the power company.
The update states that Eskom will have a shortfall in delivered coal from 2015 onwards as mines in the Witbank coalfield get deeper, thereby increasing costs. This is the opportunity African Energy is looking to exploit as they state that Botswana can supply coal to its southern neighbour on existing rail network as the coal fields are within 25 kilometres from the rail network and Mmamantswe project is less than 20km from South Africa, thus making it a cost effective undertaking.
Africa Energy will be hoping to leverage a deal on a Memorandum of Understanding signed last year between Botswana and South Africa for coal exports which would include the expansion of rail infrastructure to ensure smooth delivery.
African Energy Managing Director, Frazer Tabeart is quoted in the South African publication, Business Day, as having said that his company had already submitted a proposal to supply 300 megawatts of power from a coal-fired power station to the South African government. He reportedly said so at the Africa Down Under conference held in Perth, Western Australia.
This was in response to the request for registration and information recently issued by the South African Department of Energy.
Previous owner, Aviva was one of the first foreign mining companies to respond to the initial indications from Eskom and the South African government that it wanted to bring IPPs into the South African power grid.
According to the newspaper, a proposal was put together starting in 2007, as Aviva identified a 1.3 billion tonne coal resource at Mmamantswe and then submitted an offer also in conjunction with GDF Suez to build a 1, 000MW coal-fired power station on the deposit.
However, the deal is said to have fallen apart when the South African government dropped its initial IPP procurement programme in 2010, when the second Integrated Resource Plan (IRP2) was published. IRP2 put greater emphasis on nuclear and alternative sources of energy instead of coal to meet the country’s future power needs. African Energy is also hoping to clinch 300MW greenfield tender to build a power station to produce electricity as early as 2016 in Botswana.
According to the shareholder update, their Sese coal field is one of the only two advanced projects in Botswana capable of delivering power by 2016 and they are banking on this to get the deal done.