Bushveld’s Lemur, Sinohydro to build coal-fired power plant in Madagascar

5th April 2017 By: Mia Breytenbach - Creamer Media Deputy Editor: Features

JOHANNESBURG (miningweekly.com) – Aim-listed Bushveld Minerals’ Lemur Resources subsidiary has signed a memorandum of understanding (MoU) with Chinese State-owned hydropower engineering and construction company Sinohydro Corporation to codevelop an initial 60 MW independent power producer (IPP) coal-fired power plant and an associated 200 km transmission line in Southern Madagascar.

It is anticipated that the coal for the power station will be provided from Lemur’s coal mining permit area in Madagascar.

Under the terms of the MoU, which gives both parties exclusive rights to work with each other, Sinohydro’s objective is to develop a bankable feasibility study (BFS) and a project implementation proposal for the project, at Sinohydro’s cost, within 12 months of signing the MoU.

Under the terms of the MoU, the parties will jointly prepare an environmental-impact assessment for the project, as well as engineering, procurement and construction (EPC) and operations and maintenance contracts for the IPP plant and an EPC contract for the transmission line within 18 months.

The MoU also specifies cooperation between the two parties to secure debt and equity funding for the project.

Other objectives include the potential establishment of a future company for the project upon completion of the BFS, in which Sinohydro’s parent company PowerChina may taken an equity interest.

Further, Lemur will continue the development of its mine to supply coal to the Imaloto IPP. The company is developing a Joint Ore Reserves Committee- (Jorc-) compliant 136-million-ton coal resource, of which 68% is measured. The mine will supply coal to the Imaloto IPP plant and potentially beneficiate additional volumes into export quality coal.

“This is another example of the progress Bushveld has made across its platforms in 2017, in what we forecasted as a pivotal year for our company,” Bushveld Minerals CEO Fortune Mojapelo said in a statement on Wednesday.

He added that the MoU signing was a significant step forward in the development of Bushveld’s coal mine and power plant project in Madagascar.

“Sinohydro and its parent company PowerChina bring a wealth of technical expertise in building such projects and bringing them into operation. The MoU reinforces the commercial merits of the project and the bankable feasibility study will add significant value to the development of the power project. We look forward to working with Sinohydro and the Madagascar authorities in implementing the project and realising the immense positive social impact it will create,” Mojapelo stated.

Sinohydro VP Liu Kai added that, as a major breakthrough for the energy sector of Madagascar, this project will help ease power shortages and contribute to local economic growth in the south of the country.

POWER INTEREST
Lemur has, to date, completed a conceptual study, followed by more detailed prefeasibility studies (PFS) for the mine, power plant and transmission line.

These studies demonstrated favourable project economics, including the existing and future demand for electricity in the area. Sinohydro will use its vast expertise in power plant and transmission line engineering and construction to build on the work already done by Lemur in the PFS.

The project is anticipated to have a transformational impact on Madagascar, as currently, no electricity grid exists in the southern part of the island.

The project will enable the supply of electricity to existing mining and industrial operations in the region at a lower cost, as well as deliver electricity to tens of thousands of people currently without access to power.

Madagascar power utility Jirama, is currently negotiating an offtake agreement with Lemur for electricity for the IPP.