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Bushveld subsidiary, Chinese firm to build coal-fired power plant in Madagascar

21st April 2017

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

     

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Aim-listed Bushveld Minerals subsidiary Lemur Resources 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 expected that the coal for the power station will be supplied from Lemur’s coal mining permit area in Madagascar.

Lemur Resources is developing a Joint Ore Reserves Committee-compliant coal resource of 136-million tons, of which 68% is measured. The mine will supply coal to the Imaloto IPP plant and potentially beneficiate additional volumes into export-quality coal.

Under the terms of the MoU, which provides both parties with exclusive rights to work with each other, Sinohydro aims to develop a bankable feasibility study (BFS) and a project implementation proposal for the project at its own 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. The parties will also prepare 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 on completion of the BFS, in which Sinohydro’s parent company, PowerChina, may take an equity interest.

Further, Lemur will continue the development of its mine to supply coal to the Imaloto IPP.

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

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.

Commercial Merits

Mojapelo noted that Sinohydro and PowerChina contributed a wealth of technical expertise in building such projects and bringing them into operation. He further suggested that the MoU reinforced the commercial merits of the project, with the BFS adding 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 said in the same statement that, as a major breakthrough for the energy sector of Madagascar, this project would help ease power shortages and contribute to local economic growth in the south of the country.


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

These studies demonstrated favourable project economics, including 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 expected to have a transformational impact on Madagascar, as the country currently does not have an electricity grid 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 negotiating an offtake agreement with Lemur for electricity for the IPP.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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