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Aug 26, 2011

26/08/2011 (On-The-Air)

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It’s that time again on a Friday when AMLive presents another Update From The Coal-Face with Terence Creamer, editor of Engineering News and a contributing editor at Mining Weekly.

De Gouveia: Potential renewable energy developers are currently sifting though bidding documentation released by the Department of Energy earlier this month.

Creamer: As you may remember there was a process that took place back in 2009, whereby Nersa set out tariffs for the various renewable technologies, under the renewable energy feed-in tariff (Refit) model

  • That led developers to begin preparing projects as the tariffs were seen as very favourable.
  • Then there was the Eskom tariff application, which set aside a small portion of the increases to help facilitate the first renewable projects under Refit.
  • After that there were a number of delays, but eventually an expression of interest was called by the DoE and National Treasure in the last quarter of 2010, which saw a very big response.
  • In the meantime, government appointed lawyers to do a legal audit of the process and they found a few problems with Nersa having set predetermined tariffs, given that South Africa procurement rules require a determination on either price or BEE.
  • So eventually the Refit was abandoned in favour of a process whereby there ill be an element of price competition. People are now dubbing this the ‘Rebid’.
  • Anyway the tender document was made available for a R15 000 fee as from Aug 3, and developers are now poring over these documents.

 

De Gouveia: Are we finally on the cusp of major progress in this area?

Creamer: The indications are that while developers would have preferred the Refit, the tender should still attract interest.

  • There is also a lot happiness that the biding process is for nearly 3 800 MW, rather tan the 1 025 MW envisaged under the Refit first round.
  • There will be a bidders conference on September 14 and the preferred bidders could be selected by November. Therefore, we should expect financial close on these first projects in early 2012 and construction to begin next year two.
  • Now this is big, as the first round is going to involve investment of between R70bn and R100bn across wind, solar, biomass, biogas, minihydro and some other technologies.
  • And it’s also just the start of a larger deployment of 17 800 MW of renewable anticipated in the IRP between now and 2030.

 

De Gouveia: Billions at stake as a High Court judge applies his mind to the complex Sishen iron-ore rights matter.

Creamer: As you mentioned it is a complex case and the prize is huge. The oral arguments from Sishen Iron Ore Company (which is owed by Kumba), ArcelorMittal South Africa, the Department of Mineral Resources (DMR) and Imperial Crown Trading (ICT) were heard in the North Gauteng High Court last week.

  • Judge Raymond Zondo has reserved judgement in the matter, as he does not only need to consider the oral submissions, but also mountains of written material that was prepared by the lawyers for the various participants.
  • In essence, though, we have Kumba and Mittal asking the courts to overturn the DMR’s decision to award a prospecting right at the well-established Sishen mine, in the Northern Cape, awarded to ICT. This right was awarded by the DMR after both ICT and Kumba applied for the 21.4% that they said became vacant on April 30, 2009, when Mittal failed to apply to convert it.
  • However, Mittal has argued that it did not need to covert, as the Sishen Iron Ore Company had converted the undivided right in full in 2008 and that they merely had a 21.4% interest in that now converted right.
  • Kumba, on the other hand, is adamant that there were two distinct rights that needed to be converted. But Kumba argues that it should have received the converted right, as its application met the requirements under the law and ICT’s did not. In fact, it argues that ICT included documentation fraudulently obtained and copied from Kumba’s own application and should not have been considered on that basis alone. But it also raised other questions about the competence of the ICT application and DMR’s adjudication process.
  • DMR, for its part, is also alleging fraud against Kumba in the way it submitted its application.
  • So as you can see, it’s complicated and Judge Zondo has indicated at he needs time to make his ruling.
  • But the judge may not have the last word, with criminal charges having already been laid, which led to the recent controversial Hawk raid, as well as given the potential for appeals.
  • Nevertheless, what he says will be a vital step in moving this unhappy, yet vital, matter closer to a conclusion.

 

De Gouveia: Umgeni Water has started to consider desalination options to augment water supply in eThekweni.

Creamer: Yes, a number of municipal areas in South Africa area beginning to consider desalination as one of the options for closing what is likely to be a tightening water supply- demand equation in the coming years.

  • Some have actually already moved to build some desalination capacity, while others such as the City of Cape Town have indicated that they intend to study the feasibility of large-scale desalination to add to supply security.
  • But the latest utility to signal that it too will be probing desalination as a possible option is Umgeni Water.
  • It is initiating an investigation into the development of two 150 Ml/d reverse osmosis desalination plants to augment supply to the fast-growing eThekweni metropolitan area.
  • The solution is being studied along with various other augmentation schemes, but Umgeni Water has called for bidders to submit tenders by September 15 to conduct a detailed study of the 300 Ml/d desalination option.
  • Obviously, there will also need to b environmental impact assessments, to gauge acceptability on this score. For instance, work will have to be don on the marine impacts of the discharged brine, as well as the energy footprint of the plants 
  • It is understood that about 4 kWh of power is required for every kilolitre and Umgeni Water will assess the prospects of possibly sourcing this power from renewables projects that are likely to be developed.

 

De Gouveia: Terence Creamer is editor of Engineering News and a contributing editor at Mining Weekly. He’ll be back At The Coal-Face at the same time next Friday.

Edited by: Creamer Media Reporter
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