South African mining group Exxaro Resources and energy group GDF SUEZ, of France, confirmed on Monday that they had concluded a project development agreement and a coal-supply term sheet for a 600 MW coal-fired power plant in South Africa’s Limpopo province.

The announcement was made amid heightened anxiety over the country's supply/demand balance after State-owned utility Eskom announced another delay to the Medupi power station, which is now only expected to begin producing during the second half of 2014.

It also followed on from other project announcements by GDF SUEZ, which signed 15-year power purchase agreements with Eskom for two open-cycle gas-turbine power plants with a combined capacity of 1 005 MW in June, and which was also involved in the development of West Coast One, a 94 MW wind project, in the Western Cape.

Exxaro selected GDF SUEZ as its partner for the project in the middle of last year and is proposing that the project be developed on a site 17 km north-west of Lephalale, where the 4 764 MW Medupi project is currently under construction.

The companies reported that the total capacity of the plant could be expanded to around 1 200 MW, depending on the availability of water and transmission capacity.

The coal would be supplied from Exxaro’s proposed Thabametsi opencast mine, which could supply the power plant with up to 3.8-million tons yearly over a 25-year period.

The project was being prepared in line with the Energy Minister’s December 2012 determination, which allocated 2 500 MW of coal capacity as part of a larger independent power producer (IPP) baseload procurement programme to be implemented between 2014 and 2024.

Last month, the Department of Energy made a fresh call for potential baseload IPPs to register their projects by July 12 to aid it in the design of procurement processes, which were likely to be structured similarly to the one currently being pursued in the renewable-energy milieu.

Besides the 2 500 MW allocated to coal-fired projects, the baseload determination sets aside 2 652 MW to baseload or mid-merit natural gas capacity and 2 609 MW to domestic and imported hydroelectric prospects.

GDF SUEZ Energy South Asia, Middle East & Africa CEO Shankar Krishnamoorthy said the South African government was taking the right steps and that public-private partnerships in the power sector would contribute to the adequacy and efficiency of South Africa’s electricity industry.

Exxaro CEO Sipho Nkosi added that the group was taking advantage of the opportunities provided by regulatory developments in South Africa’s mineral and energy sectors. “We anticipate working closely with all the regulatory authorities to making this project a success,” Nkosi said in a statement.