The development of the greenfield Colenso anthracite coal mining project, in KwaZulu-Natal – primarily earmarked to supply the coal-fired Colenso power station currently in the planning phase – is expected to start next year at an estimated cost of R410-million, says coal mining and independent power producer company Colenso Power CEO John James.
“We did our sums and the conclusions were inescapable – constructing and operating a power station near the developing coal project will bring the communities in and around Colenso out of poverty and into the middle-class economy.”
James is adamant that the project will pro- vide much-needed baseload power to a strained grid, which, he says, is preventing any mean- ingful development of industries and electrification in the communities in the province.
He highlights that the project is the first independent power producer in South Africa to insist on using best-in-class, supercritical boiler technology for efficiency, as well as emissions-reduction technologies, to provide one of the world’s cleanest emissions footprints.
Colenso Power has consulted with the departments of Energy and Environmental Affairs to fulfil all the requirements for the construction and operation of a new, clean coal technology power station, having received environmental authorisation from the Department of Environmental Affairs in February 2016.
James points out that the environmental-impact assessment (EIA) is based on the construction of a 1 050 MW power station that will be built in three phases of 350 MW each, with the first phase taking about four years to complete at a capital cost of about R7-billlion.
“The EIA was conducted to such a rigorous standard that it is apparently being used as the benchmark by a well-known engineering and environmental firm in the UK as a template for all future power station developments there.”
He says Colenso Power’s technical partner, Chinese engineering and construction company SEPCO Electric Power Construction Corporation, has completed a technical and financial feasibility study which shows that the power project is technically and financially feasible.
“We have reached a point in the development of this crucial project where we are simply waiting for the green light to proceed to finalising the documents and due diligences for presentation to the Department of Energy (DoE).”
James says South African commercial banks, development finance institutions and Chinese financial institutions will fund the project, pending an announcement on the second round of the Coal Baseload Independent Power Producer Procurement Programme facilitated by the DoE.
“Our team, our communities and municipalities are ready to start finalising the requirements for the financial institutions’ respective credit committees,” he adds.
Social and Economic Development
It is estimated that the coal power station project will create 19 000 full-time jobs in the first phase of construction, and 42 000 full-time jobs if all three phases are done in succession, James notes.
“The average household income of 95% of the population of Colenso and its immediate communities is R800 per month. The household income of these communities will increase to more than R11 000 per month.”
In addition, the local communities will receive dividend flows from the power station, while the project will bring new housing development, roads, sanitation and water infrastructure with shops, clinics and schools.
“R200-million will be spent by the company in partnership with industry and coordination with local and district municipalities on social and socioeconomic development initiatives. This will ensure that, after construction is completed, employment will continue to grow sustainably,” James says.
National gross domestic product will increase by R3-billion by virtue of the first phase of construction of the project alone, in addition to the capital expenditure, James concludes.