Article from Business Day. Not telling us too much new, but may be of interest. ---------------------------------------
ALLAN SECCOMBE Published: 2011/09/21 08:00:44 AM
RESOURCE Generation, which is developing a coal project in SA?s Waterberg coalfields, yesterday listed a host of hurdles it has to clear to bring its planned mine into production.
The cost of the project has ballooned by $200m to $750m and includes a 40MW power plant which will cost about $100m. Resource Generation was considering splitting the debt funding for the plant from the rest of the project, CEO Paul Jury said.
"This is higher than originally estimated due to inclusion of the power station and increased construction costs, particularly for the coal handling and washing facilities," he said.
One of the key constraints on starting the project is Transnet Freight Rail (TFR), which had so far not signed an agreement with the Sydney and Johannesburg-listed company, he said. Resource Generation needs to secure a rail contract before it can conclude project financing.
"The reluctance of TFR?s task team to commit to a rail haulage contract will delay the mine?s initial production until the first half of 2014, assuming an acceptable contract is agreed by the end of 2011 and funding is obtained," Mr Jury said.
"We are confident of achieving a contract with TFR eventually and believe the delay is related to process and timing, rather than inability to provide haulage," he said. Resource Generation has raised the matter with Transnet CEO Brian Molefe.
Exxaro Resources, the biggest coal miner in the Waterberg, which is near the Botswana border, and other players are in negotiations with TFR about the rail line linking the coalfield to the main coal line feeding Richards Bay and Mozambique?s Matola coal terminal.
Resource Generation expects to receive its National Environment Management Act approval and water use licence before the end of this year, allowing it to start pre-construction work at the mine and rail link to the TFR line.
It is in talks on coal supply arrangements with Eskom?s power plants in Mpumalanga.
Resource Generation, whose share has yet to trade since its secondary listing on the JSE, has completed plans for its Boikarabelo mine and by having reached this stage it would be able to fast- track the building of the project, Mr Jury said.
Designs for the 40MW power plant are being finalised. The plant forms part of the first phase of the project.
