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Miners wait on $5bn Mmamabula venture Posted: Wed, 12 Jul 2006 [miningmx.com] -- THE award of the mining contract for the R32.5bn ($5bn) coal mine and integrated power station at Mmamabula in Botswana would be delayed for about two months, according to Greg Kinross, CEO of project manager, CIC Energy. However, discussions with potential mining contractors were “progressing well”, said Kinross. He was speaking at the Botswana Resource Sector Conference. CIC Energy, and finance advisor Absa Capital, are selecting partners for the 12 million ton/year coal field and 3600 megawatt integrated power station at Botswana’s Mmamabula coal field, on the border with South Africa. Electricity produced from the power station, scheduled for commissioning for 2011, will be predominantly for Eskom. Kinross said in May that tenders for the mining and electricity production would be awarded towards the end of July. However, interested parties were continuing with due diligence studies suggesting the project had attracted wide interest from potential partners. “We’ve had unsolicited proposals from mining houses and independent power producers (IPPs),” said Kinross. “Mining houses will acquire equity in the mining assets and operate it. The interest has been very strong.” The bidders have not been identified but it’s thought firms such as Xstrata and Anglo Platinum would be interested. The beating heart of the project, however, is the IPP, says Kinross. “The mining contract is anywhere between 5% to 10% of the total project cost. The rest is the power plant itself,” he says. There’s also infrastructural upgrades although pressure to upgrade rail facilities to Richards Bay, the nearest port, is not pressing as the export of coal from Mmamabula would almost behave like a by-product credit in the overall ambit of the project. It was expected that the coal measured and indicated resource at Mmamabula could be doubled in August. There was also opportunity for a third phase development of the coal fields currently subject to a two stage project. The project was brought to Tau Capital, the listed holding structure of which CIC Energy is part. “We’re happy to take risk, we’re well capitalised, and we make decisions quickly,” says Kinross. The trick now is to coordinate the “multitude” of international banks and institutions and export credit agencies required to put the financing in place, says Anand Naidoo, a banker for Absa Capital.Free news alerts: click here to subscribe
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