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coal of africa, taken from mining weekly sa

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    Power projects offer ‘upside’ to coking coal projects
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    By: Esmarie Swanepoel
    Published on 12th November 2008
    JOHANNESBURG (miningweekly.com) - JSE-listed coal producer Coal of Africa (CoAL) confirmed on Wednesday that both of its power generation proposals, jointly submitted with two independent power producers (IPPs), had been unconditionally prequalified by State-owned power utility Eskom.

    The company would supply supply coal to the proposed IPPs, which could be located close to each of the company’s Makhado and Vele coking coal projects.

    At the Makhado project, CoAL had teamed up with energy provider AES Energy Developments, and at the Vele project the company was in a partnership with energy producer Mulilo Energy and the China Railway Construction Corporation.

    In both cases, the coal supplied would be a middlings product, which was a lower quality coal produced along with the primary coking coal product.

    “Importantly, the successful economics of both coking coal projects are in no way dependent upon CoAL’s ability to sell the middlings fraction, but it does represent substantial upside in the event that the IPPs were ultimately successful,” the company said.

    The two submissions formed part of 23 prequalified tenders shortlisted by Eskom.

    Proposals for the projects were due before the end of the year, and contracts would be awarded by the first quarter of 2010. The IPPs were expected to deliver power to the national grid between 2012 and 2017. The build, own, and operate contracts were expected to last for 25 years.

    Eskom had stated previously that it would require between 2 100 MW and 4 500 MW of electricity under the programme, with a minimum plant capacity of about 200 MW.

    Editor: Mariaan Olivier
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