New ResGen power station gets green light

LEPHALALE - Detailed designs for a 40MW power station at Steenbokpan in the Lephalale region are being finalised and its funding has been included in the planned Boikarabelo mine’s capital estimate, energy company Resource Generation (ResGen) announced this week.
It is estimated that the power station alone will cost $100 million, which makes the capital expenditure for construction of stage one of the mine an estimated $750 million. According to ResGen’s MD Paul Jury, this estimate is higher than originally thought due to inclusion of the power station and increased construction costs, particularly for the coal handling and washing facilities.
The company is considering the possibility of segregating debt funding for the power station from the project facility for the mine. Project funding is conditional on a rail haulage contract with Transnet Freight Rail (TFR). To date, TFR’s task team negotiating with Resource Generation has declined to commit to a contract and the company has elevated the matter to Transnet’s group chief executive who in the past has indicated his support for the Boikarabelo project and for a rail haulage contract.
“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. 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,” Jury said.
Meanwhile, progress has been made in obtaining the two remaining major license approvals. The first, under the National Environment Management Act (NEMA), will enable construction of the mine and the rail link to begin and, as soon as this is received, pre-construction works will commence on site. The second is the Integrated Water Use License from the Department of Water Affairs, enabling the use of water from the bore field on the company’s properties, which will provide sufficient water for stage 1 of the mine’s operations. Both license approvals are expected during the final quarter of 2011.

ResGen vs Medupi
The proposed new power plant will be substantially smaller than the Medupi power station project. When completed, Medupi will have six boilers each powering an 800MW turbine, producing 4 800MW of power. This will be the largest dry-cooled coal power station in the world. Medupi will be supplied by coal from Exxaro’s Grootegeluk coal mine, which will supply 14.6Mt coal per year for 40 years. The first 800 MW unit is expected to be commissioned in early 2012, with the next units following at nine-month intervals.