Page 6 - AfrElec Week 43 2020

AfrElec COAL AfrElec

Resgen loses IDC’s backing for

Boikarabelo coal project

SOUTH AFRICA SOUTH Africa’s state-owned Industrial Devel- debt, of which the PIC and the IDC were to pro-
opment Corp. (IDC) has pulled out of Resource vide ZAR950mn and ZAR540m respectively.
Generation’s (Resgen) ZAR4.2bn ($250mn) Boi- Noble Resources was to provide the balancing
karabelo coal project. ZAR850m as well as a further ZAR750m as part
Resgen told the Johannesburg Stock of its commitment to ZAR1.63bn in mezzanine
Exchange today that the IDC had declined to debt.
extend an agreement to invest in the project, and The PIC and IDC were to provide ZAR550m
had cancelled “… all previously approved facili- and ZAR360m respectively in the mezzanine
ties under the Mine Funding Package”. loan funding.
“[M]arket conditions under which the Boi- The IDC said on Monday that it was tighten-
karabelo Coal Project would operate have dete- ing its investment criteria in its current financial
riorated materially,” said Resgen, citing reasons year after recording heavy losses for the 2020
provided by the IDC for its withdrawal from the financial year.
project. Tshokolo Nchocho, CEO of the IDC, said the
Boikarabelo is anticipated to produce 6.5mn organisation would be measured in its invest-
tonnes per year of thermal coal with a second ment approach in respect of its role in South
phase of 18mn tpy in the offing, pending devel- African president, Cyril Ramaphosa’s proposed
opment of rail infrastructure. economic development plan. “We have given a
The development is a hammer blow for Res- lot of thought to our role in the economic devel-
gen, which has been working on Boikarabelo’s opment plan,” he said in response to a question.
development for at least ten years. Without the “The answer is that our investment choices will
IDC, the remaining investors are the Public be made on a strong financial and development
Investment Corp. (PIC), the government-owned basis.”
asset manager, and Noble Group, a trading com- The Boikarabelo is situated in the Waterberg
pany based in Singapore. coalfields, which are estimated to contain about
A funding agreement consisting of senior and 40% of South Africa’s total thermal coal. It is also
mezzanine debt as well as equity investments an element of the government-backed National
was signed between the parties and Resgen in Development Plan in terms of unlocking the
December. Northern Mineral Belt. ™
The structure was for ZAR2.34bn in senior

Tlou Energy seeks funding

for Lesedi power project

BOTSWANA TLOU Energy has said that it is still seeking involve drilling additional gas wells and the pur-
funding for development of the Lesedi power chase of additional electricity generators.
project in Botswana. Funding required for phase two is approxi-
The project is proposed to be developed in mately $20m.
two phases. Phase one involves transmission Upon successful completion of phase one and
line construction, transformers, grid connec- two, the company plans to expand the project
tion, electricity generators and potentially the beyond 10 MW. This expansion is expected to
drilling of additional gas wells. be completed using project revenues and debt.
The approximately 100-km transmission Current funding discussions are mainly
line will run from the Lesedi project to the town related to phase one ($10mn) and have been
of Serowe, where it will connect to the existing progressing well. The company is in discussions
power grid. Initial generation is proposed to be with a number of groups, some more advanced
up to 2 MW of electricity. Funding required for than others.
phase one is approximately $10mn. These include institutions with a focus on
Phase two funding is for the expansion of infrastructure development within Botswana
electricity generation up to 10 MW. This will and cleaner energy groups looking to see a move

P6 www. NEWSBASE .com Week 43 29•October•2020