Aim-listed Bushveld Minerals subsidiary Lemur Resources’ Imaloto coal asset, in Madagascar, is at an advanced development stage, being fully explored and ready to start mining, subject to environmental approvals, says Lemur Resources CEO Prince Nyati, who reiterates that all effort and development activities remain focused on making the project bankable.

“We have not started operations [at the coal mine] as we are in the process of completing a social- and environmental-impact assessment (SEIA). Notwithstanding this, we have strictly aligned our SEIA process with the International Finance Corporation standards,” he tells Mining Weekly.

Lemur has appointed global environmental advisory firm WorleyParsons to manage its SEIA process, which will be done in conjunction with a local consultant. The SEIA is expected to be completed in the first quarter of 2019.

Lemur Resources, Bushveld Minerals’ coal and power platform, is developing an integrated thermal coal mining and independent power producer asset in the Sakoa basin in south-west Madagascar. The company has one of only three coal mining exploitation licences in the country.

The Imaloto project consists of a 136-million-ton coal resource, 90% of which is Joint Ore Reserves Committee measured and indicated.

The project also includes an initial 60 MW mine-mouth coal power plant, as well as more than 200 km of new transmission lines, developed in parallel as one of Madagascar’s leading independent power producers.

Lemur is co-developing the project with Chinese State-owned power engineering and construction company Sinohydro, a subsidiary of PowerChina.

The coal mine project in Madagascar is earmarked to supply coal to its 60 MW mine-mouth Imaloto coal-fired power station. The company revised the mining plan in September last year to align the coal asset with the power station, which will have a minimum 30-year life and, thereby, ensure security of fuel supply.

Nyati highlights that milestones for the project to date include the signing of a binding 30-year power purchase agreement (PPA) with Madagascar State-owned utility Jiro sy Rano Malagasy. Apart from the PPA with Jirama, Lemur is also in discussions with various private mining and industrial companies for potential power offtakes for the power plant.

The plant commissioning date is expected in 2021, subject to approvals and financial close on about $200-million of funding.

A key strategy for Lemur is for the asset to supply sustainable and affordable power to the south-western Madagascar region, Nyati stresses, noting that “affordable baseload power is critical for industry and manufacturing and for economic development – particularly in mining resource-based economies”.

According to Bushveld Minerals CEO Fortune Mojapelo, the development of the Imaloto project, including the mine and the power plant, will see the region receiving new infrastructure and stable energy access.

“Thousands of new jobs will be created, more than $1-billion in new government revenue will be generated and about $200-million in new investment in the country will be achieved,” he highlights.

Mojapelo adds that the design and location of the project are such that it will immediately increase the country’s baseload power supply by 15% and be able to scale up to supply more power to new electricity users in the region in the longer term.

The Imaloto project has significant value to the Bushveld portfolio. This value continues to grow as the project’s development progresses, especially now that it is in the bankable phase.

Coal asset growth forms part of parent company Bushveld Minerals’ overall growth enhancement; however, the vanadium business is the core focus for Bushveld Minerals with its vanadium assets set for growth this year. Mojapelo has stressed to Mining Weekly on previous occasions that there is a “unique opportunity” for the company to position itself as a large, vertically integrated and low-cost vanadium platform that will be of significance in the energy storage and steel manufacturing space.

Coal Market
Nyati indicates that the general coal demand outlook is looking positive with the rest of the continent seeing coal developments outside the countries traditionally known for coal mining, such as Botswana and Mozambique. Countries like Zambia, Malawi, Tanzania, Nigeria and even Madagascar have, in recent years, announced coal projects that are either operating or are at an advanced stage. Further, there has also been demand from coal users in North Africa and the Middle East.

“Kenya’s 1 000 MW Lamu coal power project, which will initially be supplied with imported coal is a good example of new coal demand and demonstrates that coal is still a viable fuel source for baseload power,” he points out.

While Nyati expects demand for coal across the continent and from large global users, such as in Asia, to continue growing, he acknowledges funding as a key challenge. “Nevertheless, we believe that there are players that are starting to realise the potential of coal mining opportunities. The Aluwani Mining Fund launched by South African asset management company Aluwani Capital is a good example of this,” Nyati points out.

The fund, in which investment and corporate advisory company VM Investment Company and Nyati have been involved, was launched at the Investing in African Mining Indaba in Cape Town, last month, with the goal of taking advantage of the high growth potential of mining opportunities within sub-Saharan Africa, as well as unlocking value by improving efficiencies in mining operations and logistics to develop economically viable mineral resources that can contribute to sustainable socioeconomic growth. The fund is looking at a portfolio of projects at various stages of development in Africa that it can participate in, Nyati concludes.