China withdraws funding from Limpopo 3 GW SEZ power project

18th November 2021 By: Simone Liedtke - Writer

The Chinese government has confirmed that the country will no longer be funding a new 3 GW coal-fired power plant in the planned Musina-Makhado Special Economic Zone (MM-SEZ) in South Africa’s Limpopo province.

Chinese Premier Xi Jinping announced China’s end to funding of overseas coal projects in an address at the United Nations on September 21.

Various Chinese institutions have been linked to the contested MM-SEZ project, which was first announced by President Cyril Ramaphosa on his return from the Forum for Africa and China Cooperation in September 2018.

The two biggest lead investors, China Huadian Hong Kong Company and Power China International Group, which have jointly committed over $9-billion to the project, are Chinese State-owned enterprises.

However, in correspondence with Fossil Free South Africa earlier this month, China’s ambassador to South Africa, Chen Xiaodong, confirmed that China “will not build new coal-fired projects abroad”.

The ambassador said: “China is willing to work with all countries, South Africa included, to establish and improve a green and circular economic system development system [and] green and low-carbon energy.”

The MM-SEZ proposals had included at least 20 industrial plants for processes including coking, coal washing, a coking plant, ferrochrome and ferromanganese and stainless steel, and lime and cement plants, powered by a bespoke 3 GW coal-fired power station.

All these facilities would be very high emitters of greenhouse gases (GHGs).

The energy project was highly controversial from the start, as the carbon emissions from the plant and its associated carbon-intensive industries had been omitted from South Africa’s Integrated Resource Planning planning process and would have made it impossible for South Africa to meet its international commitments on GHG emissions reductions, Fossil Free South Africa stressed.

Other concerns included that it would be the first SEZ that would be run by a foreign operator and not by a South African SOE, in what would be the largest of South Africa’s 11 SEZs.

Fossil Free South Africa coordinator David Le Page applauded the decision by China to withdraw funding from the project.

“We are delighted China is following through on its ground-breaking commitment to end overseas coal financing by cancelling plans for the ill-conceived MM-SEZ coal-fired power station.

“We hope that proposals for development in the area will proceed in a way that honours the rights of local communities and of labour, protects biodiversity and water resources, and are in line with South Africa’s Bill of Rights and international commitments to rapidly reduce and eliminate carbon emissions.”