JOHANNESBURG (miningweekly.com) – A request for a proposal for the building of a $600-million, 300-MW power plant using discard Anglo coal may be invited this year or early next, Anglo American Thermal Coal CEO Norman Mbazima said on Monday.
Mbazima told Mining Weekly Online that the plan was for an independent power producer (IPP) to own the power plant and for Anglo to enter into a power purchase agreement with the IPP, which would also make use of Anglo's discard coal.
While Anglo had no intention of entering the business of power generation, security of supply of electricity was crucial to the company, which had prompted it to appoint consultant Mott MacDonald as technical adviser to deal with the plan to self-generate.
"We don't expect to finance it. We expect it to be built independently and we expect it to be operated independently, but we have to make it happen to give us baseload electricity security for our other Anglo American operations in South Africa," he said.
Given the phased increases in electricity prices over the next three years, Mbazima expected Anglo to be able to produce the electricity cheaper than the price at which Eskom would be selling it.
But cost was not the main issue. "In South African, electriciity may represent 3% of our costs and it may now go to 4%. So, it's not very big in terms of cost, but if you don't have it, you don't mine, and security of supply is the real issue for us," he added.
Anglo also has large volumes of discard coal, much of it buried under rehabilitated dumps on which cows graze.
"We are looking to develop a power station using that coal. We have enough for a long life power station of 40 to 50 years and that's going ahead right now," Mbazima said.
He said that Eskom had responded positively to the Anglo plan to generate its own power and that the contribution of Anglo was likely to be included in South Africa's proposed integrated resource plan.
Anglo would also have to feed into the transmission grid currently owned and operated by Eskom and would have to agree commercial terms with Eskom.
A location had not yet been decided for the proposed plant, but some envisage it being located between Anglo's Kleinkopje and Greenside collieries.
A modular approach is likely, which could result in possibly three 300-MW power plants being built.
Mining Weekly Online learns that Xstrata Coal is also planning a 600-MW self-generation plant nearby and that the two companies, which have a three-way joint venture in Colombia together with BHP Billiton, may work together on the self-generation of electricity.