Boikarabelo power station (Resgen)
|This article is part of the CoalSwarm coverage of South Africa|
Boikarabelo power station is a proposed 600-megawatt (MW) coal-fired power station in South Africa, next to the Boikarabelo Coal Mine.
The map below shows the approximate location where the plant would be built, near the Boikarabelo Coal Mine in the Waterberg Coalfield, Limpopo Province.
The project's 2012 environmental impact assessment stated that the power station "will be completed in two phases. Phase I involves the construction of a power station with a capacity of 45MW, and the electricity generated will be utilised as a direct electricity supply to the Boikarabelo Coal Mine operation. In Phase II, it is proposed that the 45MW Power Station will be expanded to a potential capacity of up to 260 MW, and surplus electricity could potentially be fed into the National grid, providing additional power stability to the region." The envisaged Boikarabelo Power Station would combust middlings coal from the Boikarabelo Coal Mine for the generation of electricity.
On the project's schedule, the report states: "It is envisaged that the construction of the proposed Boikarabelo Power Station will commence in 2013 off-site initially. Construction will take place over a period of 24-30 months for Phase I (45MW), and 30-40 months for Phase II (215MW). It is envisaged that the power station will be fully operational by 2015 and will last for approximately 40 years, after which it may be decommissioned. Phase II will only commence post-2018 in the event that there are requirements for electricity supply in the surrounding area."
In July 2016 Resgen said it was investigating the potential of building a 600 MW coal-fired power station following the receipt and review of a concept feasibility study for a 300 MW power station. The company said the larger power station presented a more compelling economic case, and would begin feasibility studies for a 600 MW coal plant.
However, development of the plant is dependent on development of the Boikarabelo mine, which has been delayed as Resgen struggles to secure financing. With no progress on the plant since the project's EIA in 2012, the plant proposal appears to be delayed indefinitely.
Mining at the Boikarabelo mine was scheduled for late 2013. However, as of January 2014 the company was still working to secure financing for the mine portion of the project. 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.
In September 2015 ResGen said it received funding for construction of the mine from HAB & JPR Privée, a Swiss private company. The mine is estimated at US$480 million, and the coal handling and preparation plant at US$200 million. 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.
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.”
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:
- "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.
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. 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.
Jubilee Australia and Australia Institue Urge Efc to Drop Financing
In October 2016, Jubilee Australia Research Centre and the Australia Institute published a report urging Efc, Australia's export finance agency, not to finance the Boikarabelo mine and associated power station based on the poor standard of environmental and social assessment applied to the project and on Australia's export credit agreement with other OECD countries.
- Sponsor: Resgen South Africa
- Parent company: Resource Generation (Australia)
- Location: Magaliesburg, South Africa
- Coordinates: -26, 27.545833 (approximate)
- Status: Cancelled
- Capacity: 600 MW
- Projected in service:
- Coal Type: Middlings coal
- Coal Source: Boikarabelo mine
- Source of financing: HAB & JPR Privée (for the mine)
Articles and resources
- "Boikarabelo power station: Draft environmental impact assessment report," Resgen, September 2012.
- "Resgen eyes Q4 mobilisation of Boikarabelo EPC contractors," Mining Weekly, July 12, 2016
- "New Power Station may push Boikarabelo Coal Mine Expansion," Bulk, July 6, 2011.
- "ResGen makes progress on two fronts in funding for Boikarabelo mine," BusinessDay, January 2, 2014
- "Resgen targets Oct 2015 for completion of Boikarabelo power supply infrastructure," Engineering News, Oct 29, 2014
- "Resgen expects delay at Boikarabelo mine," CNBC Africa, Feb 12, 2014
- "Resource Generation coal project Boikarabelo secures construction funding," Mining Review, September 30, 2015
- "Boikarabelo funding negotiations continue – Resgen," Mining Weekly, June 22, 2015
- "Resgen signs EPC deal for Boikarabelo plant," Mining Weekly, May 6, 2016
- Brendan Ryan, "Noble to take more coal from Resgen’s Boikarabelo mine," MiningMX, 11 December 2017
- "IEEFA South Africa: A New Coal Project Meant to Serve Export Markets Is Unlikely to Achieve Lasting Success," IEEFA, April 6, 2018
- "Coal production at Boikarabelo Coal Mine expected Q1 2019," African Mining Market, Sep 13, 2018
- "Market Update," 24 June, 2019
- Marleny Arnoldi, Resgen expects financial close for Boikarabelo project later this quarter, Mining Weekly, Apr. 2, 2020
- Rod Campbell and Luke Fletcher, "African white elephant: Should Australian taxpayers finance a South African coal mine?" Jubilee Australia Research Centre and the Australia Institute, October 2016