Boikarabelo Coal Mine

From Global Energy Monitor

The Boikarabelo coal mine is a proposed coal mine, owned by Resgen South Africa, a subsidiary of Resource Generation (Australia), to produce 6 million tonnes per annum, for the Boikarabelo power station, in Resgen, Limpopo, South Africa.

The project received financing in 2019, but has been delayed logistically and financially because of the COVID-19 pandemic.

Location

The image below shows the approximate location of the mine.

Loading map...

Background

Mining at the Boikarabelo mine was scheduled for late 2013.[1] However, as of January 2014 the company was still working to secure financing for the mine portion of the project.[2][3] In February 2015 ResGen said that its Boikarabelo mine had been delayed by three to six months as the company’s main earthworks contractor, Protech Kuthele, went into liquidation in early July 2014.[4]

In September 2015 ResGen said it received funding for construction of the mine from HAB & JPR Privée, a Swiss private company.[5] The mine is estimated at US$480 million, and the coal handling and preparation plant at US$200 million.[6] The technical review of the mining project concluded in February 2016. In May 2016 Resgen signed a letter of intent for for US$141 million with engineering firm Sedgman Limited for the design, procurement and construction of the coal handling and preparation plant.[7]

In March 2017 Resgen signed an extension of its facility agreement with Noble Resources for up to US$8.4 million for the Boikarabelo mine. Due to the delay of funding, Resgen expects the first coal from the mine to be produced in the first quarter of 2019.

In December 2017, Resgen agreed to offer to sell to international commodity group Noble Resources a committed volume of 800,000t of coal annually for years one to three of the “uncontracted tonnage offtake agreement” plus up to another 300,000t/year on a quarterly basis. Noble is a 13% equity owner of Resgen. In November, Resgen chairman Denis Gately was replaced by Lulamile Xate. Gately said, “The last financial year, and the five months since, has not been easy. The company has been able to survive financially thanks solely to support provided by Noble, one of its significant shareholders and a longstanding and committed supporter of the Boikarabelo project.”[8]

As of April 2018 the project is still struggling to secure financing, and the energy economics group IEEFA believes the project is unlikely to take off:[9]

"The project’s original lending consortium, in negotiation with ResGen for two years, pulled out of the project in 2017 because an offtake agreement with Eskom for 40 percent of the mine’s output could not be reached. Subsidized funding from Australia’s export credit agency, Efic, is now said to be off the table. That leaves the company negotiating now with a new consortium in hopes of reaching financial close this quarter. But that will get ResGen only part way to where it needs to be: the talks do not cover funding for a required rail link or for ramp-up costs after the mine is commissioned. While it attempts to secure financing, ResGen is relying on a continuing working capital facility from one of its major shareholders, Noble Resources, with which it also has a coal offtake agreement. This does little to brighten the projects outlook, however, given Noble Group’s own current financial crisis."

In September 2018 it was reported that coal production from Boikarabelo was expected to start in the first quarter of 2019 and reach 1.26Mt a month from December 2019. Resource Generation (Resgen) is developing the project through Ledjadja Coal, a Black Economic Empowerment (BEE) subsidiary. Resgen holds a 74% stake in Ledjadja Coal, while the remaining 26% stake is held by Fairy Wing Trading 136, a South African company. Ledjadja Coal obtained US$450 million in financing from FirstRand Bank, Industrial Development Corporation of South Africa, and Noble Resources International.[10]

In June 2019, a "Market Update" on Resgen's website announced that all members of the proposed Lending Syndicate had confirmed credit approval for funding the development of the mine, pending terms, conditions and board approval, for a total funding package of R4.2b.[11] On April 2, 2020, Resgen announced that the final investment decision (FID) on the mine would be delayed from April 2020 until at least June 30 due to logistical and financial problems caused by the COVID-19 pandemic.[12]

Project Details

  • Sponsor: Resgen South Africa[13]
  • Parent Company: Resource Generation (Australia)[13]
  • Location: Resgen, Limpopo, South Africa[13]
  • GPS Coordinates: -26, 27.545833 (approximate)
  • Status: Proposed
  • Production Capacity: 6 mtpa[13]
  • Total Resource:
  • Mineable Reserves: 955 million tons[13]
  • Coal type: Thermal
  • Mine Size:
  • Mine Type: surface, open pit[13]
  • Start Year: TBD
  • Source of Financing:

Related SourceWatch articles