Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) – Coal asset developer Ncondezi Energy has signed a nonbinding memorandum of understanding (MoU) with the Shanghai Electric Power Company (SEP) that could see SEP becoming the controlling shareholder of Ncondezi’s 300 MW power plant project in Tete, northern Mozambique.
The agreement documented the parties’ mutual intention to further cooperate with each other and set out a work plan and timetable, with a view to executing a legally binding joint venture agreement heads of terms (JVAHOTs) in the fourth quarter of the year.
Under the terms of the MoU, the JVAHOTs would outline a transaction whereby SEP acquired a controlling equity stake in the power project, as well as a minority interest in the associated Ncondezi mine project.
This investment structure remained subject to final due diligence by SEP and any changes would be documented in the JVAHOTs and announced when signed.
Following execution of the MoU, the parties would begin the negotiation of the JVAHOTs; a process that would run concurrently with the final due diligence process to be conducted by SEP to meet the fourth-quarter timeframe.
Ncondezi had agreed to provide SEP with a short period of exclusivity to agree the JVAHOTs.
Ncondezi CEO Paul Venter said the formalising of the relationship between Ncondezi and SEP was a significant step toward agreeing a transaction that would bring the Ncondezi power project to commercial realisation.
“SEP brings a wealth of power plant financing, construction and operating expertise that will be a major benefit to both the power project and Mozambique,” he commented.
SEP was incorporated in China and listed on the Shanghai Stock Exchange and had experience in owning, building and operating coal-fired power stations.
This was aligned with its strategy of international growth in Africa, specifically in Mozambique.
The majority of SEP’s shares were held by China Power Investment Corporation, which was one of the largest power generation groups in China, with an installed capacity of 90 000 MW.