Exxaro Resources is expected to be one of two Independent Power Producers (IPPs) identified by the Department of Energy (DoE) in the first round of applications to supply energy from coal-fired sources.
Some 2,500MW of power is generated from IPP operated coal-fired power stations in total; the first round is expected to supply about 900MW.
Johannesburg- and Sydney-listed Resource Generation (Resgen) is hoping to throw its name into the hat for adjudication in the first quarter of next year when decisions are expected to be made on IPPs in the second round of applications.
“We have to participate in the second window,” said Rob Lowe, appointed CEO of Resgen at the beginning of this year following the ouster of the predominantly Sydney-headquartered management in November.
Resgen’s board was replaced mainly by South Africans in line, said Lowe, with the views of shareholders who mostly reside in South Africa including the Public Investment Corporation and the Industrial Development Corporation.
Resgen is building the Boikarabelo coal project in the Limpopo province, a six million tonne/year (mtpa) operation with potential to scale up to 26 mtpa in about five phases, said Lowe in an interview. Finance for the outstanding $400m in project capital has been largely agreed as well as a plant and mining contractor bringing to a close a turbulent period in the company’s short history.
Whilst Boikarabelo was originally envisaged to be an export thermal coal mine, there is the flexibility to redirect the coal to Eskom through Noble Group, the Singaporean trading house which has an offtake agreement with Resgen and is also a shareholder.
Lowe said his team had completed a desktop feasibility study and found Boikarabelo was optimal if it supplied coal for a 400MW to 600MW facility although permitting and government approvals had been so far won for a 300MW (and some approvals already for 400MW to 600MW), said Lowe.
“We have identified potential funder for R12bn ($830m) for the IPP. We have signed a memorandum of understanding with those partners and we hope to have a vehicle that can take the process through.
“We can increase our capacity and use lower grades of coal for the IPP. The partner is likely to come from Japan or South Korea because both those countries have proven abilities in different jurisdictions other than their own, and have readily available funding,” said Lowe.
