Mmamantswe developer to submit 600MW Eskom bid

Brian Benza | Tuesday August 4, 2015 14:33

African Energy recently sealed a deal for the conditional sale of Mmamantswe  project to an unnamed South African developer for $20 million (P200 million).

The Mmamantswe project, which is estimated to host 1.25 billion tonnes of coal, has an approved Environmental Impact Assessment (EIA) for a coal mining operation of up to 10 million tonnes a year, and a 2,000MW power station.

In a statement released yesterday, African Energy said the developer is expected to use the Mmamantswe project to form a bid consortium to fund the preparation and submission of a bid into South Africa’s upcoming Coal Base-load Independent Power Producer (IPP) Procurement Programme.

“South Africa’s Department of Energy has issued a Request for Proposals (‘RFP’) to developers of projects for the first bid window of a 2,500MW coal base load IPP procurement programme. This first bid window is for 1,600MW, of which up to 600MW can come from projects physically located outside South Africa’s border.

Mmamantswe project is only 20km from the border with South Africa and has been previously evaluated by Eskom for integration into the South African grid.

“The developer will prepare and submit a Mmamantswe RFP bid for a 600MW coal‐fired cross‐ border power project,” said African Energy.

 Under the terms of the deal, African Energy will be paid an initial sum of  $10m if the project bid is shortlisted by South Africa’s Department of Energy. On receipt of the initial $10m, African Energy will transfer ownership of its shares in the Mmamantswe project company to the Developer. The second payment of US $10m will be made if the project reaches financial close.

Giving an update of the Sese project, in which they sold a 51 percent stake to Zambia’s First Quantum Minerals, African Energy said that a development programme and budget is been drawn for the assessment of a fully integrated power project.

First Quantum, which is increasing its stake in the Sese Integrated Energy Project from 51 percent to 75 percent for a further $12 million investment, is expected to invest upto $1.5 billion to develop a 600MW power project.

FQM is expected take about half of the power to its Zambia copper mine operations which are seriously constrained by power shortages with the rest supplied to other markets.

 Yesterday, FQM announced that it would lay off about 1,480 workers at one of its Zambian copper projects after a reduction in its power supply curbed production, the company’s local subsidiary told Reuters. Zambian power utility, Zesco Ltd is limiting supplies after water levels at its hydroelectric plants dropped due to drought.

First Quantum Minerals last week shut its Sentinel copper processing plant after electricity supplies to its operations were reduced by 24 percent.