ASX-listed coal-miner Riversdale Mining and its joint venture (JV) partner, Elgas, have signed a framework agreement for the development of the Benga power project, in Mozambique, with Mozambican Energy Minister Salvador Namburete.

The proposed mine-mouth coal-fired thermal power station will be situated in Mozambique’s Tete province, near Riversdale’s Benga coal project, which will supply thermal coal to the plant.

The first phase of the project, which will involve 500 MW of capacity, will be commis- sioned by April 2013, after which the plant could potentially be scaled up to 2 000 MW.

The company has also been granted access to Mozambique’s existing power transmission network, a critical precondition for the project to succeed.

The signing of the formal framework agreement as well as the meeting of other precondi- tions has provided the company with further impetus to progress the project in tandem with activity at the Benga coal mine, Riversdale chair- person Michael O’Keeffe notes in a statement.

“The Benga power project will help meet increasing regional demand in Mozambique and in South Africa, as well as supply a cost-effective source of energy for our own mine at Benga,” he added.

Discussions regarding power purchase agreements with a number of offtake parties are also still continuing, the company says.

The power plant, which is a 50:50 JV between Riversdale and Elgas, will be built at an estimated cost of $1,3-billion.

The project owners are seeking a strategic equity partner to take between 50% and 80% interest in the project and to provide deve- lopmental and operational capabilities.

Mozambique currently has an electricity generation capacity of about 2 200 MW, with 125 MW generated by the Mozambican electricity authority, Electricidade de Moçambique (EDM) and 2 075 MW generated by Hydroelectric Cahora Bassa.

The Benga power station will deliver power directly to the EDM transmission grid at the Mutambo substation, with power to be sold to EDM and South African State-owned power utility Eskom under separate long-term offtake agreements.

The potential to scale the project up to 2 000 MW will, however, be dependent on the transmission grid being developed to handle the increased capacity.

Riversdale’s Benga coal mine, in which it holds a 65% stake, will start exporting product by the second quarter of 2011.

The remaining 35% of the coal mine is held by India’s Tata Steel.

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