Exxaro to develop 600MW coal power plant

Exxaro Resources has partnered with GDF SUEZ, a French Independent Power Producer (IPP), to deliver a 600 MW coal fired power plant in Limpopo.

The move takes advantage of South Africa’s IPP programme which has allowed for a plug in of about 2500 MW coal fired power into the national grid. It will plug a gap in South Africa’s tight electricity system.

In an announcement released yesterday the JSE listed coal miner, Exxaro, said the plant to be located in the Waterberg region has a potential to be expanded into a 1200MW capacity.

Exxaro Resources CEO Sipho Nkosi said “This is an exciting milestone for Exxaro in the development of this initiative to contribute towards power availability and supply in South Africa. As a major player in the coal mining sector, we are integrated in the power (and energy) production value chain”.

The fuel for this 600MW baseload coal-fired power station will be supplied from Exxaro’s Thabametsi mine, a prospective opencast greenfields mine, via a surface conveyor belt.

Exxaro added that the period of the coal supply will be determined by the duration of the power purchase agreement, but is anticipated to be up to 25 years. Coal will continue to be a significant part of South Africa’s energy mix even though the Department of Energy’s (“DoE”) Integrated Resource Plan for Electricity 2010 to 2030 (“IRP”) sees renewable energy making up 42% of all new electricity generation capacities in South Africa over the next 20 years.

The company said South Africa urgently requires the installation of additional electricity generation capacity in the near future due to the combination of a low reserve margin and growing electricity demand.

In December 2012, the South African Minister for the DoE issued a Determination including an allocation of 2,500 MW of coal baseload power, which is in accordance with the capacity that the IRP allocated to coal ‘New build’ between 2014 and 2024. In line with this, the DoE issued a Request for Registration and Information seeking feedback from interested independent power producers by 12 July 2013, which was duly submitted by GDF SUEZ. As with the DoE’s Renewable Energy Independent Power Producer Procurement Programme, the DoE will be the procurer, while State-owned power utility Eskom will be the buyer and will sign the power purchase agreements.

Shankar Krishnamoorthy, CEO and President of GDF SUEZ Energy South Asia, Middle East & Africa, commented: “GDF SUEZ’s partnership with South Africa is gaining momentum, with several agreements successfully concluded during the second quarter of 2013. That is not only good news for us, but also for the country. 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. The South African government is taking the right steps and GDF SUEZ takes pride in working with its local partner Exxaro to help improve the country’s energy supply security.”

Nkosi added that “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. We have played to our strength of coal production and partnered with a competent entity such as GDF SUEZ for the development of the power plant and electricity production. We anticipate working closer with all the regulatory authorities to making this project a success for the benefit of all in South Africa.”

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