The developer of the proposed Mulilo coal-fired power station, which is associated with the development of the controversial Vele coal mine on a property near the Mapungubwe world heritage site in the Limpopo province, has placed the project "on hold until further notice".

The decision, which was reportedly made some months ago, was formally communicated to interested and affected parties by Arcus GIBB, which had been contracted to conduct an environmental-impact assessment (EIA) for the establishment of the power station, as well as associated infrastructure, such as transmission lines and substations near Musina.

Initially envisaged was the development of a 300-MW to 900-MW coal-fired power station project, to be developed by a consortium of South African and Chinese energy investors.

The project had also been submitted to State-owned power utility Eskom under its ‘Medium Term Power Purchase Programme (MTPPP)' - a scheme designed to secure up to 3 000 MW of near-term electricity supply relief from independent power producers and co-generators. However, that programme was also delayed, owing to regulatory and funding challenges.

Arcus GIBB stressed that the project was always dependent on Coal of Africa Limited (CoAL) proposed Vele coal mine, which had attracted "strong opposition" from conservation bodies.

"This has also impacted on the EIA process for the proposed Mulilo power station project and associated transmission power lines," the consultancy said, noting that it halted its work following the publication of a draft scoping report, which has incorporated stakeholder comments.

"Arcus GIBB has been informed by the proponent for the proposed Mulilo power station project, Mulilo power, that this proposed project has been put on hold until further notice."

Engineering News Online was unsuccessful in it attempts to secure comment from the project's developer.

However, CoAL told Engineering News Online that, while there was potential for the establishment of a power station close to the Vele colliery, the business case was not dependent on such a development.

It was still anticipated that 100% of phase one production from Vele would be the subject of an offtake agreement with ArcelorMittal South Africa, which had signed a letter of intent for a minimum of 2,5-million tons a year of coking coal, with an option to increase that to five-million tons.

"CoAL will continue to enhance the upside commercial benefits by finding opportunities in the power-generation markets for the middlings product which is a byproduct of the metallurgical-coal production," the company told Engineering News Online.

The miner also stressed that it was in possession of a new order mining right for the Vele coking coal project, which was executed on March 19, 2010, and which had opened the way for the construction of the mine plant.

"There is no further authorisation that CoAL should obtain and none that we are awaiting for the construction of the mine and wash plant. As such, we are entitled to undertake these activities which are now at an advanced stage and expect the plant to be commissioned in the third quarter of 2010," the company said, adding that applications were under way for all outstanding authorisations required for mining proper.

"The process for the water use licence application is at an advanced stage, with regular consultation taking place between CoAL management and the Department of Water Affairs in Limpopo. Construction of the mining infrastructure can commence as well as preparation of the mining area, but ore mining will not start without the water use licence."

The miner added that the necessary permits for bush clearing had been obtained from the Department of Agriculture, Forestry and Fisheries  and the Limpopo Department of Economic Development, Environment and Tourism.

Internal access roads within the mining area were currently being built, but CoAL was appealing a decision by the Department of Environmental Affairs to refused permission for the building of an access road on the farm adjoining the mining right area.