De Klerk will also assist in concluding the negotiations on the Medupi coal supply agreement with Eskom
Kibo Mining, the Tanzania-focused mineral exploration and development company, received the final commercial bids for the Mbeya coal-to-power project (MCPP).

Tanzania – Kibo Mining received the final bids for the EPC contract and OEM from major international, China-based SEPCO III and multinational conglomerate General Electric International (GE) contract on 31 October 2016.

Tractebel Engineering (TE) will now subject both bids to a stringent benchmark that was previously developed by TE, to determine whether the bids comply with international best standards, practice and price as well as specific conditions that were stated in the respective bid specifications.

The benchmarking process will be completed over the next three weeks, where after the company and its technical, financial and legal advisors will engage SEPCO III and GE in a final round of negotiations by the beginning of December 2016.

The signing of the final EPC and OEM contracts is currently scheduled for the end of December 2016.

Receipt of the final EPC and OEM commercial bids also enabled Kibo Mining to advance two other critical work streams of the MCPP development process:

  • The integrated financial model for the MCPP and the integrated bankable feasibility ftudy can now be finalised; and
  • Submission of the mining right application for the Mbeya Coal mine – submitted on 31 October 2016.

With the above work streams completed, by the end of December 2016 the MCPP will be fully prepared and ready to transition in

to full funding mode, provided that the Government of Tanzania has by then completed the policy review process pertaining to energy projects, which will allow the MCPP to proceed with the conclusion of a Power Purchase Agreement for the MCPP.

“We have achieved significant progress at the MCPP in 2016 and by the end of the year we will have met all of its ambitious 2016 development targets, albeit that not all were met within the original target dates, in spite of limited financial resources as well as delays caused by policy reviews and changes in Tanzania” says Kibo Mining CEO Louis Coetzee.

The MCPP is now independently recognised as a robust, well-advanced project.

“This is best demonstrated in the significant strategic partnerships we have concluded during the course of the year and most notably in the fact that the company was able to fund all development work on the MCPP during 2016, without a single equity placement,” Coetzee adds.

“It is disappointing that we will not be as far advanced with financial close as previously anticipated, due to the fact that we cannot proceed with the finalisation of the power purchase agreement, until such time as the Tanzanian Government has completed its policy review process.

“We are, however in constant discussion with Government on this matter and we have received continued co-operation and reassurance that we will be able to make up for the time lost during the policy review process,” says Coetzee.

Due to this delay Kibo Mining will have to reschedule certain activities to ensure that the MCPP development timeline is not compromised; but do however not deem it necessary to adjust the timeframe within which the company intends to fund, construct and commission the MCPP.

Coetzee says that the rescheduling process is currently ongoing and cannot be finalised until completion of the policy review process, which is expected to be completed very soon.

Due to the significant advances made during 2016, bolstered by strategic partnerships with SEPCO III and GE amongst others, the MCPP now holds enough critical mass allowing it to absorb delays and obstacles without losing momentum or focus.