CIC to move into coal-to-liquids sector
July 25, 2007
By Eric Onstad
busrep.co.za
Gaborone - CIC Energy Corp, which is developing a $6-billion coal mine and power station in Botswana, wants to move into the coal-to-liquids sector as it prepares for a big increase in coal resources at its Mmamabula coal field, its chief executive said on Wednesday.
CIC has recently hired an official who worked at South Africa's Sasol, a world leader in coal-to-liquids, to head its own development in that area, which are at an early stage, CEO Gregory Kinross said.
"One of the reasons why we see this as being very attractive in Botswana is... we've been able to negotiate the regulatory framework very quickly for the power project," he told the Capital Resources mining conference in Botswana.
"We see the same benefits for a coal-to liquids project, whereas in South Africa it's quite a lot of regulatory issues that any new project would have to go through."
Sasol was also considering establishing a coal-to-liquids project in the same region, but CIC's initiative is independent of that, he added.
CIC recently hired Peter du Toit, who worked for a number of years at Sasol, to be executive vice president of its coal-to-liquids development.
The Mmamabula coal field will have abundant amounts of coal to supply other ventures in addition to the coal-fired power plant being developed along with London-listed International Power Plc.
Mmamabula is an extension of South Africa's Waterberg coal deposit, which contains 40 percent of South Africa's coal reserves. Mmamabula already has a measured and indicated resource of 2.3 billion tonnes and recent exploration is expected to lift that further.
"By the end of the year we are anticipating a significant increase in our resources," Kinross said.
"This really gives us the ability for phase 1 of the power station, phase 2 of the power station and further projects to come from this massive coal field."
The first phase of the project is expected to mine 7.5-9.0 million tonnes of coal per year to supply a power station with a capacity of 2,200-2,400 megawatts.
The cost has shot up to over $6-billion from an earlier estimate of $5 billion due to soaring costs throughout the mining industry due to a commodities boom.
The final cost will be agreed when a final feasibility study is completed shortly. Construction is due to start next year with a launch date of 2012 envisaged.
Most of the power will be supplied to South Africa's power utility Eskom with some also going to the Botswana Power Corp.
Negotiations have been ongoing on the price Eskom will pay for the power, which Kinross said will be significantly in excess to historic prices.
South Africa has some of the cheapest electricity prices in the world, but officials have warned that these will have to increase in coming years to pay for new capacity.
New generating capacity has not kept up with strong economic growth in South Africa, which has seen intermittent blackouts in recent years. South Africa is estimated to need to add at least 1,500 MW of new capacity each year over the next two decades to keep up with surging demand. |
