November 18, 2017

Botswana based coal producer eyes South African energy market

African Energy Resources, a Botswana based coal producer, is looking at South Africa as a potential market for the coal it will be producing once its flagship projects, Mmamabula West and Mmamantswe are complete.

According to AER, the coal will be supplied under South Africa’s cross-border independent power producer (IPP) programme.

Meanwhile, African Mining Brief is informed that at Mmamantswe, African Energy has entered an agreement where TM Consulting (TMC) will acquire the project for US$20m, subject to achieving certain milestones, principally the financial close of a 600MW integrated power project. TM Consulting is funding all development costs on the project. In another development, in February, African Energy signed a non‐binding term sheet with an experienced South African developer to jointly develop the Mmamabula West Project into an integrated coal mine and 600MW thermal power station for the supply of power in the southern African market.

It appears through the agreements have been thrashed out following the gazette issued in April by the South African department of energy, which set out terms for the country’s coal baseload cross‐border Independent Power Procurement (IPP) programme. The terms included that 3,750MW of coal-generated power shall be procured through one or more IPP programmes from cross-border projects. This is an increase from the initial 2,500 MW allocation proposed in December 2014.

In addition, it allows the department of energy to commence direct negotiation with one or more project developers in addition to a tendering process, and specifies that IPPs aim to connect to the grid for new generation capacity as soon as reasonably possible.

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