Boikarabelo coal project, South Africa
Name of the Project
Boikarabelo coal project.
Location
Limpopo, South Africa.
Client
Resource Generation (Resgen).
Project Description
In February 2016, Resgen reported that it would implement a revised mine plan at its Boikarabelo coal mine. This followed a technical review of the geological model by its technical committee comprising in-house and external experts who suggested that the revised mine plan could achieve a better opportunity than previously expected. The plan is based on selective mining and in-pit dumping to maximise productivity, reduce operating costs and minimise any environmental impact.
The company will also implement a project execution strategy that transfers mine construction risk through the appointment of a small number of reputable engineering, procurement and construction (EPC) contractors with substantial balance sheets, which will allow for recourse in the event of failure or delay.
The company has implemented a strategy to reduce capital costs and minimise risk and has selected Stefanutti Stocks Mining Services as its preferred contract mining company.
Sedgman has been appointed the coal handling processing plant (CHPP) contractor.
The Boikarabelo coal seam is between 20 m and 30 m below the surface, allowing for low-cost, opencut mining. The seam is between 100 m and 120 m thick, with zones of varying-quality thermal coal.
The mine will be developed using a two-phased approach to limit upfront capital expenditure. The first phase will deliver about 15-million tonnes of run-of-mine coal a year, which will equate to about six-million tonnes of product coal. Of this, about 3.6-million tonnes will be exported and about 2.4-million tonnes will be used domestically.
Phase 2, planned for 2022, will involve ramping up production to 12-million tonnes of product thermal coal.
The project includes a 48 km rail link to the existing rail network.
Jobs to be Created
The project is expected to create 2 500 jobs in the construction phase and 709 full-time jobs.
Net Present Value/Internal Rate of Return
The project has an internal rate (IRR) of return of 17%.
Value
The estimated capital cost for the project is $545-million.
Duration
Resgen’s black economic-empowerment (BEE) subsidiary Ledjadja Coal received the Boikarabelo mining rights from the Department of Mineral Resources in April 2011. Initial construction of the mine started in the first quarter of 2013 and was scheduled for completion in September 2018.
The mine’s expected date of first coal production has been delayed and is now expected to begin production in 2019.
Latest Developments
Resgen has made the first drawdown of $2.4-million under an extended $8.4-million facility agreement.
The company reported on March 14 that it had obtained the $8.4-million extension to a March 2014 facility agreement with Noble Resources International, with the additional funds available to Resgen subsidiary Ledjadja Coal in three tranches to September 30. The money is being used to fund the operations and development of the Boikarabelo mine.
The company’s main focus during the quarter ended March 31 was to finalise the key material agreements relating to the mine and logistics, including the engineering, procurement and construction (EPC) contract for the coal handling and preparation plant (CHPP), the CHPP operations and maintenance contract, the ancillary works EPC contract and the transportation of coal agreement.
Progress has also been made towards the funding of the rail link EPC contract and activities continue to be undertaken at the mine site preparing for the arrival of the EPC contractors.
Parallel to advancing the development of the mine, Resgen has also continued work on establishing an independent power producer (IPP) to produce electricity from coal supplied from Boikarabelo.
It expects to submit a proposal to the Department of Energy when the next submission window for the coal-based IPP procurement programme opens towards the end of this year.
Key Contracts and Suppliers
Digby Wells Environmental (mining right application, mine-waste licence, environmental authorisation process for power plant); Sedgman (CHPP and ancillary work packages); RCE (rail design and construction); NuWater (water EPCM services);EHL Energy (transmission lines), Stefanutti & Stocks (preferred mining contractor).
On Budget and on Time?
First production has been delayed to 2019.
Contact Details for Project Information
Resgen, tel +27 12 345 1057, fax +27 12 345 or email info@resgen.com.au
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