Musina-Makhado power station

From Global Energy Monitor
This article is part of the CoalSwarm coverage of South Africa
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Musina-Makhado power station, also referred to as the Power China International Energy Project, was a proposed 1,320 to 3,300-megawatt (MW) coal-fired power station in the Waterberg area of South Africa.

The coal project was proposed for the Musina-Makhado Special Economic Zone. It was permitted in February 2022, but presumed cancelled and replaced by solar power plans by March 2022.[1][2]

Location

The map below shows the Waterberg region, the approximate location where the plant would be built.

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Background

Since at least 2014, there has been discussion of a large coal plant in Limpopo through a partnership with China. In November 2014, it was reported provincial state entity Limpopo Economic Development Agency and Chinese corporation Hong Kong Mining Exchange Company had entered into a deal for a R39 billion power station that would supply electricity to plants that processed mineral resources into finished metal products.[3]

In July 2018, Chinese state-owned companies and the South African Government signed an MOU for the development of a proposed US$10 billion metallurgical complex, including a coal power station, in the Musina-Makhado Special Economic Zone (SEZ) in Limpopo province. The SEZ has a reduced corporate tax rate of 15%, instead of 28% for SA companies. Construction was planned for 2019.[4] The project has been referred to as the Power China International Energy Project.[5]

According to a Memorandum of Agreement (MOA) signed in July 2018, the plant would be 3,000 MW and would cost approximately US$4.5 billion overall. Phase 1 of the plant, 2 x 600 MW, was estimated to cost US$1.9 billion. PowerChina would invest and construct the plant and, under the terms of the MOA, was expected to facilitate the signing of a Joint Development Agreement with other investors.[6]

In September 2018, the South African government and the Bank of China entered into a trade agreement in which the Chinese will make investments of US$1.1 billion (R15 billion) in special economic zones and industrial parks in South Africa. The deal will include the construction of the coal-fired power plant over six years.[7]

According to press reports, the proposal came as a surprise as it was not listed in the country's latest Integrated Resource Plan (IRP).[8]

The Environmental Impact Assessment documents referenced a potential 3,300 MW project.[9]

As noted below, in response to community opposition, the proposal for the power plant was informally downsized to 1,320 MW in May 2021.

After China committed to stop all overseas coal financing in September 2021, several news sources reported that the future of the Musina-Makhado power station was now in jeopardy, as the power station had expected to rely on Chinese funding to cover construction costs.[10][11] In November 2021, the Chinese ambassador to South Africa confirmed that Chinese government-owned institutions would not be providing financing for the Musina-Makhado power station.[12]

Musina-Makhado Special Economic Zone (MMSEZ)

The South African government formally approved a special economic zone in 2016. In 2017, the then Department of Trade and Industry issued an operating license to the South African Energy and Metallurgical Zone Co., a subsidiary of Chinese firm Shenzhen Hoi Mor.[13]

According to the Chinese website for the South African Electro Metallurgical Special Economic Zone (EMSEZ), the park was originally planned to contain: the coal plant; a coal washing plant (with capacity to process 12 mtpa); a coking plant (3 mtpa); an iron plant (3 mtpa); a stainless steel plant (3 mtpa); a ferro manganese powder plant (1 mtpa); a ferrochrome plant (3 mtpa); and a limestone plant (3 mtpa).[8]

Potential transition to "green energy"

In late 2021, the CEO of the entity mandated to develop and operate the Musina-Makhado Special Economic Zone, MMSEZ SOC, commented on the zone's plans in light of China's finance announcement (see supra). “The Chinese development will not have any impact on the development of the MMSEZ power project. The development of the power station will still go on, making use of green energy and technology supported by the Chinese,” said Shavana Mushwana. He continued by stating that the decision by the Chinese had been a blessing in disguise because it had escalated the plans of the MMSEZ to transition from a fossil-fuel energy generator into a renewable-energy generator. “There are various sources of energy generation that will be considered to provide uninterrupted and cheaper energy to support the MMSEZ metallurgical complex and ensure security of supply. Upon conclusion of the investment agreement with our Chinese partners, a public announcement will be made thereafter.”[1]

Permitting

In September 2020, an Environmental Impact Assessment (EIA) tentatively endorsed the construction of the MMSEZ if steps were taken to mitigate problems such as water scarcity.[14]

The Centre for Environmental Rights and researchers found that the body carrying out the EIA, Delta Built Environment Consultants, had not fully solicited public opinion, in particular from communities opposed to the project, during 2019 and 2020 consultations.[13]

In March 2021, authorities rejected an EIA report submitted in February 2021 due to a failure to fully assess environmental and energy issues. An updated version of the report had to be produced, and an extra public consultation process had to be run. Given conflicts of interest among authorities, academics and NGOs remained concerned they could ultimately accept the EIA report.[13][15]

In addition, the northern part of the zone may have already had its EIA approved and in May 2021, construction was expected to begin shortly.[16]

In September 2021, the final EIA for site clearance was submitted to the Limpopo department of economic development, environment and tourism. The assessment, prepared by the project’s new environmental consultants, EnviroXcellence Services, noted that the final master layout plan had been amended to reduce the overall footprint of the project to 3 862ha, “committing over 51% of the original site for conservation and ecological linkages”.[17][18]

Lisa Thompson, a political economist and public-sector transformation specialist based at the University of the Western Cape, said recent announcements about alternative energy sources may be "about ensuring there is no public outcry when the MMSEZ EIA is approved, which I am confident will occur before the end of [2021]."[1]

2022 permit from Limpopo province

In February 2022, Limpopo province gave environmental authorisation to the initially proposed project to spend more than $10 billion (R150 billion) building a 4,600 MW coal-fired power plant, a coking facility, and ferroalloy and steel plants. The province acknowledged the potential impact on ancestral graves and cautioned against air pollution, saying measures would need to be taken to mitigate emissions. It noted water would be imported from Zimbabwe.[19][20]

Opposition

The coal plant proposal and MMSEZ have faced ongoing criticism from interested and affected parties. For example, a December 2020 analysis of the EIA by the African Centre for Citizenship and Democracy found that plans to mitigate water scarcity "are superficially detailed and are implausible, even to the layperson," and are unlikely to succeed given the high demand for water from coal mines and farms in the region.[14]

In March 2021, NGOs, academics, and concerned citizens submitted at letter of concern to the Department of Trade, Industry and Competition, and the Department of Environment, Forestry and Fishing regarding the proposed MMSEZ. The letter highlighted the lack of meaningful public engagement and transparency in the face grave environmental and social risks.[21][13]

The German Friedrich Ebert Foundation held a number of workshops on water use for the MMSEZ and commissioned a study on the associated water risks. According to the expert report, the zone lies in the arid and low-precipitation Sand River catchment. In this populous area, groundwater is the main source of water and has already been overexploited, and urban areas already rely on water transfer from other catchments.[13][22]

After three inadequate public participation rounds in September and October 2020 and in January 2021, the Spring 2021 meetings still "exploded" as people vented their frustration about inadequate information on the zone. For example, meetings on the EIA process in Musina and Makhado "descended into anarchy after a dispute over the necessity of translating the presentation into three languages."[23]

In May 2021, the chief executive of the MMSEZ, Lehlogonolo Masoga, published an Opinion piece in the Mail & Guardian touting the benefits of a reduced proposal,[24] which was followed up by compelling rebukes.[25]

2021 Downsizing

According to May 2021 reporting and an Opinion piece from the chief executive of the MMSEZ, it appeared that Shenzhen Hoi Mor and the investing companies were downsizing the proposal to get the project’s EIA approved. The revised zone could be 3,500 to 4,500 hectares, or approximately half the size of the previously envisaged 8,000 hectares. The companies were making promises of carbon sequestration and the use of clean coal technologies. The proposed coal plant capacity was likely reduced to 1,320 MW, with an additional 50 MW solar plant proposed. The cement and lime plants appeared abandoned, and other industries such as the processing, machinery, and refractories factory plants were to be moved to the Antonville site on the outskirts of Musina.[16][24] However, as noted in various Mail & Guardian Opinion responses, many concerns remained. For example, it was still clear that the zone would be "a water-use intensive cluster, requiring significant amounts of coal" and "even with the dubiously named 'clean coal' will still produce high carbon emissions and toxic waste."[16][25]

As of 2022, plans for the park remain in question. Freedom Front Plus leader in Limpopo, Marcelle Maritz, said: “The Limpopo provincial government, with its premier, are known for not keeping promises. We are not convinced that this project will be launched because it has been two years since they spoke about it and nothing concrete has been done.” In the same Sunday World artcile, DA provincial leader and member of the provincial legislature, Jaques Smalle, said: "It remains to be seen if the MMSEZ will launch in 2022".[26]

2022 Solar plans

In March 2022, it was reported that the company overseeing the development of the proposed Chinese-backed industrial park had ditched plans to build a coal power station and would instead use solar power. "Environmentalists said no. World leaders said no – [saying instead] let's reduce our carbon footprint and stop producing energy through coal," said MMSEZ CEO Lehlogonolo Masoga. "We have abandoned that part of the project. We are now focusing on solar."[2]

An April 2022 report by the Centre for Research on Clean Energy and Air considers the environmental approval for the coal project to be cancelled, mentioning the possibility of the 1 GW solar plant to replace it.[27]

Project Details

  • Sponsor: PowerChina
  • Parent company: PowerChina
  • Location: Waterberg coalfield, Limpopo Province, South Africa
  • Coordinates: -24.075, 28.141667 (approximate)
  • Status: Cancelled
  • Gross Capacity: 1,320 MW to 3,000 MW
  • Type:
  • Projected in service:
  • Coal Type: Bituminous
  • Coal Source: Waterberg, South Africa
  • Cost: US$4.5 billion[6]
  • Source of financing:

Articles and resources

References

  1. 1.0 1.1 1.2 "SEZ still on track, despite Chinese withdrawing funding," Zoutnet, November 27, 2021
  2. 2.0 2.1 "Coal feet: Limpopo industrial park backed by China ditches plans to build power station," fin24, March 2, 2022
  3. "Limpopo to get new R39bn power plant," Business Report, November 12, 2014
  4. "Chinese investors plan $10 bln metallurgical complex in South Africa," Reuters, July 27, 2018
  5. "Ramaphosa’s China visit culminates in investment, coal deals worth billions," City Press, September 3, 2018
  6. 6.0 6.1 "MOA," CER, July 24, 2018
  7. "SA enters R15bn trade pact with Bank of China for industrial investment," Business Live, September 3, 2018
  8. 8.0 8.1 Helena Wasserman, "The new coal power station in Limpopo will only be used by the Chinese – here’s why it’s an ‘irrational’ project," Business Insider SA, September 11, 2018
  9. See, e.g., "Activists relieved as Limpopo Province slams the brakes on risky Musina Makhado Mega-Project," CER, March 19, 2021
  10. "Plans for new Chinese coal power plant in Limpopo in doubt, consultants admit," Fin24, September 28, 2021
  11. "China’s exit from coal power puts Limpopo plant in limbo," Business Live, October 17, 2021
  12. "China withdraws funding from Limpopo 3 GW SEZ power project," Mining Weekly, November 18, 2021
  13. 13.0 13.1 13.2 13.3 13.4 "Musina Makhado: South Africa’s budding carbon emitter," China Dialogue, May 6, 2021
  14. 14.0 14.1 "Development Dilemmas of South Africa’s Special Economic Zone Industrialisation policy- the Case of Musina-Makhado Energy Metallurgical Special Economic Zone and its potential socio-economic impact," African Centre for Citizenship and Democracy, December 21, 2020
  15. "Comments on the EIA Report," Limpopo Department of Economic Development, Environment and Tourism, March 4, 2021
  16. 16.0 16.1 16.2 "Musina-Makhado metallurgical zone revision a back-peddle or a back door?," Mail & Guardian, May 12, 2021
  17. "Musina-Makhado Special Economic Zone (MMSEZ) Designated Site Environmental Impact Assessment Report, Final Report Revision 03," EnviroXcellence, September 13, 2021
  18. "China won’t fund coal power for Musina-Makhado Special Economic Zone, ambassador confirms," Mail & Guardian, November 18, 2021
  19. "SA province clears way for $10bn coal complex," Money Web, February 26, 2022
  20. "Limpopo clears way for R150bn Chinese coal complex," fin24, February 25, 2022
  21. "Open Letter to Government Regarding the Status of Consideration of the Proposed Musina-Makhado Special Economic Zone (MMSEZ)," Earthlife, March 17, 2021
  22. "Water risks of coal driven mega projects in Limpopo: the MCWAP and the EMSEZ," Society Work and Politics (SWOP) Institute, University of the Witwatersrand, May 2020
  23. "Public participation is a farce in Musina-Makhado project," Mail & Guardian, May 6, 2021
  24. 24.0 24.1 "The Musina-Makhado zone puts people first, says its chief executive," Mail & Guardian, May 12, 2021
  25. 25.0 25.1 "Masoga’s glowing article about the Musina-Makhado Special Economic Zone is disturbing," Mail & Guardian, May 28, 2021
  26. "Work on Musina SEZ to kick-start in April," Sunday World, March 8, 2022
  27. [https://energyandcleanair.org/wp/wp-content/uploads/2022/04/Final_Chinese-overseas-briefing_April2022.pdf "BRIEFING: 12.8 GW of Chinese overseas coal projects cancelled, but 19 GW could still go ahead,"] CREA, April 2022

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