Mmamabula looks to Namibian link
WANETSHA MOSINYI
Staff Writer
| Friday June 13, 2008 00:00
The CEO of Bon Terra Mining Eddie Scholtz told the Botswana Economic Forum on Wednesday that the TKR link and port were at concept study and will be presented to the governments of Botswana and Namibia on completion.
The railway line and the seaport will form the basis of the export of coal from Botswana to Namibia and beyond. Scholtz said he did not foresee any problems negotiating with either government.
'There is a huge demand (for coal) in the market,' he said. 'The price is right and we have the coal. So we need that seaport and the rail link.'
The Mmamabula project, which is developed by Toronto- and Botswana-listed CIC Energy in partnership with International Power Plc, is estimated to cost about $10 billion.
Sholtz said attention was shifted to Namibia because coal facilities at Richards Bay in South Africa, which were initially proposed, were fully allotted and there was no capacity for Botswana coal there.
A rail line of approximately 1,500 km long will need to be constructed from Mmamabula through Botswana and Namibia by a transportation consortium which could include CIC Energy.
At the Namibian Coast, the building of a coal terminal and loading facility for loading ocean going vessels at a high rate and lower costs is also being considered.
The new trans-border coal corridor will link Botswana to the west coast of Africa. The project is currently at pre-feasibility study stage and is due to be completed in the third quarter of this year.
Scholtz said by current estimates, the export coal project could be operational by 2013.
CIC Energy is currently concentrating on the first phase, which involves the construction of a 2,500MW power station and a 10 million ton a year associated mine.
But negotiations with electricity off-takers South Africa's power-strapped utility Eskom and the Botswana Power Corporation are contributing to the delay in the project's schedule, the company has reported.
'Challenging' conditions in the global engineering, procurement and construction (EPC) market mean project costs are likely to rise.The global EPC market is tight and contractors are demanding different terms that are likely to delay the fast progression of the first phase of the US$9.5-billion project.
Already, the companys P4 billion Activox refinery project for concentrate from BCL Mine has already suffered due to the EPC market crisis, Norilsk management has said.
'Strong demand in the EPC market for steam turbines has resulted in EPC contractors insisting on terms and conditions for financed projects of the scale of the Mmamabula Energy Project that we don't believe will be acceptable to lenders without changes to risk allocations,' Gregory Kinross, President of CIC Energy, said recently.In January, engineering delays saw the costs of developing the project ballooning to US$9.5 billion, more than $3 billion above previous estimates, partly due to engineering delays.