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CIC Energy progress on power plant plan Posted: Mon, 01 Dec 2008 [miningmx.com] -- CIC Energy selected China’s power station builder Shanghai Electric Group to build a 1,320 megawatt power plant at its $3bn Mmamabula coal mine and electricity generation plant in Botswana. There is still some way to go before construction starts in mid-2009, with a number of contracts that have to be agreed, most notably the power offtake deals with South African electricity utility Eskom and Botswana Power Corporation. “As terms and conditions of these agreements had been substantially negotiated previously, CIC Energy anticipates concluding the agreements in mid-2009,” CIC Energy president Greg Kinross said. The engineering, procurement and construction transaction with Shanghai Electric will be finalised before the financing deals and power offtake agreements are agreed by mid-2009. “A large segment of funding is being targeted from a Chinese export credit agency,” Kinross said, adding talks are underway with South African commercial banks and development finance institutions as well as other export credit agencies. A potential lending group is conducting a due-diligence study into the project and the funding agreement should be in place by mid-2009. The potential financiers involved have not been as badly affected by the global financial crisis as commercial banks, he said. “CIC Energy is also in active discussions with potential partners to take an equity stake in the MEP (Mmamabula Energy Project) and these discussions include potential IPP (independent power producer) partners.” "We are contemplating strategic investment by financial investors as well as the IPP, which will be responsible for operating the power station," he said. These are likely to include International Power, with which CIC Energy has already signed an agreement with to develop one or more power stations in Botswana. "In terms of that agreement it's possible they'll still be involved in the MEP (Mmamabula Energy Project," Kinross said. The electricity generation project could be production from late 2012 or early 2013. CIC Energy expects to agree definitive terms with Shanghai Electric for the contract by the end of March 2009. Under the preliminary agreement the two groups will also negotiate an option for Shanghai Electric to be involved in expansions of the power plant. CIC Energy has appointed Parsons Brinckerhoff to evaluate Shanghai Electric’s bid and specifications of the contract. The appointment could run into the construction phase, assisting with project management and overseeing the work done on the plant as well as its commissioning. Parsons Brinckerhoff is working on Eskom’s Medupi coal-fired power plant and has worked with Botswana Power Corporation at the Morupule plant. CIC Energy will mine 4.5 million sales tonnes of coal a year from the Serorome Block to supply the power station. Talks are underway with a preferred contractor to build a coal washing plant. CIC Energy will submit an application for a mining licence this December. It has total resources of three million tonnes, of which 98% are in the relatively high-confidence measured category.
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