South Africa’s Exxaro Teams Up with GDF SUEZ for Power Station Joint Venture

BRISBANE, Australia - July 30, 2013 - PRLog -- The joint venture project between Exxaro Resources and GDF SUEZ will be located in South Africa’s Limpopo province, the same district as Grootegeluk, the Exxaro mine that is due to supply coal to Eskom’s 4,750MW Medupi power station. Exxaro said the power installation could be scaled up to 1,200MW.

The development is in terms of a government ‘determination’ in December 2012 in which it allocated some 2,500MW of coal baseload power as part of the country’s future energy supply between 2014 and 2024. By July, GDF SUEZ submitted its interest in building the power project in terms of its position as an independent power producer.

“We have taken advantage of the opportunities provided from current regulatory developments in South Africa’s mineral and energy sectors to develop a coal mine that can supply new power generating capacity,” said Sipho Nkosi, CEO of Exxaro Resources.

No capital cost has been placed on the venture, or how the parties intend to fund it, a critical point given Eskom’s Medupi power station is likely to be R10b ($1b) more expensive than the R95b ($9.5b) initially planned. However, Exxaro Resources said in August 2012 that Thabametsi could cost R900m ($90m) if it were decided to become a 4mtpa producer.

Exxaro said at the same time that the mine had been modelled as a 30mtpa producer as well which would incur a far weightier capital cost of R9.5b ($950b). At the time, Exxaro was studying the likely demand from Eskom rather than using the mine as a provider to an independent power producer.

The site for the power station would be 17km north-west of Lephalale, adjacent to Grootegeluk, said Exxaro. Coal from Thabametsi would be transported by surface conveyor belt and a conventional truck and shovel method of operation would be used for mining, the company said.

The period of coal supply would be determined by the duration of the power purchase agreement although it was anticipated this would be 25 years, Exxaro said.

According to government’s energy department, renewable energy is expected to make up 42% of all new electricity generation in South Africa over the next 20 years, but Exxaro said there was still space for another baseload coal-fired power station.

“Successful public-private partnerships in the power sector will contribute to the adequacy and efficiency of South Africa’s electricity industry which is key to the country’s economic development,” said Shankar Krishnamoorthy, president and CEO for GDF SUEZ’s South Asia, Middle East and Africa operations.

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