http://www.engineeringnews.co.za/article/ontheair-16022007-2007-02-16-2

On-The-Air (16/02/2007)

Published 16 Feb 07        By: Martin Creamer
Every Friday morning, SAfm's AMLive's radio anchor John Perlman speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday's At the Coalface transcript:

Perlman: Power stations very much in people's minds. Something happening in Limpopo Provice, I believe.

Creamer: On-site activity is due to begin in mid-year on this very big R70-billion power station, which is now being referred to as the Lephalale power station. That, of course, takes into account the Alpha and Charlie, which means that this is going to be a six-unit station. The first action will take place in mid 2011 in terms of power generation, so it takes them 48 months from the start of activity on-site to actually build the first unit and there after every nine months you will have another unit coming through, giving you a total of 4 500 MW, which is a very large station, one of our largest ever. At the same time we have got return-to-service stations, the Camden Power station has now returned-to-service, four units each of 200 MW and by the end of the year the other four units will have been recommissioned. That means that by 2010 with Grootvlei and other stations coming into the return to service there will be another 3 600 MW. The only bad news, of course, is that it doesn't look like they will be able to continue to charge only 17c per kilowatt hour and are now talking more in the region of 25c to 30c per kilowatt hour.

Perlman: Martin, let's stay with coal but look at the companies that actually do it. I believe a big BEE transaction coming up.

Creamer: A very large BEE transaction has been concluded. The latest coal BEE, a R7-billion coal BEE, is really going to benefit something like 200 000 people and that is the Anglo Inyosi Coal, which has been concluded. That transaction is taking in a lot of activity at the community level and Deutsche Securities, which was involved in this deal, reports that it will be a very upliftment based and cash will go down to communities from day one. Although the investors will have a long gestation period of 10 to 12 years, the good news is that the communities around which the activities take place will benefit immediately. There are four projects involved, but one operating coal-mine and that is Kriel Colliery, which supplies coal to Eskom, that is the operating asset and then there will be four other projects. The project finance for this will be delivered by Anglo Coal, R15-billion over time, and most of the vendor finance in this very big BEE deal, R7-billion deal, will come from the Anglo American Group. So, probably the broadest-based BEE deal we have had yet with a lot of woman involvement. The 8 200 employees of Anglo Coal already have a massive women complement, something like 12,5% of the 8 200 are women and that is growing. So it is ahead of the mining charter.

Perlman: So news from Mpumalanga.

Creamer: Again, on coal. It looks like the on-off Klipspruit coal project is now back in contention and that is a BHP Billiton initiative. BHP Billiton had proposed this under the old order rights, but got caught in the whole change to new-order mining rights. Now they are back into feasibility study for Klipspruit, a R2-billion investment expected there. Once it is in feasibility study with BHP Billiton you can interpret that as having an excellent chance of go-ahead. At the same time there is also activity at the Douglas Middelburg project, which is a R2,4-billion project. So, a lot of energy-coal activity in Mpumalanga in view of Eskom particularly requiring a lot more coal and also export opportunity. BHP Billiton itself has moved its exploration team from Melbourne to Johannesburg. There is a lot of exploration in Africa, activity in the diamond field, Angola and also DRC, with a very early stage aluminium project in mind, possibly for the DRC. Closer to home, due to an acquisition that was made, BHP Billiton now has control of the Corridor Sands project and its feasibility there should end in the next 12 months. There is thus a very good chance of another mineral sands project in neighbouring Mozambique.

Perlman: Well, at the coalface we talk about lots of other things besides coal, but today we talked about just that - coal. Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he'll be back with us at the same time next week.

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