HomeEnergy MineralsEskom and Exxaro sign coal supply agreement

Eskom and Exxaro sign coal supply agreement

Arnot power station
– an existing Eskom
coal-fired operation
Johannesburg, South Africa — MININGREVIEW.COM — 19 September 2008 – State-owned power company Eskom and diversified resources group Exxaro Resources Limited (Exxaro) have signed a coal supply agreement for Eskom’s new base-load power station – Medupi Power Station – situated at Lephalale in the Limpopo province.

The joint statement issued today said Exxaro’s capital expenditure for the project was estimated at R9 billion, and production was planned to begin in the third quarter of 2011 with a ramp-up to full production by 2014.

In terms of the agreement, Exxaro’s Grootegeluk mine will supply an average of 14.6 million tonnes per annum of power station grade coal to Medupi over the next 40 years. The coal to Medupi will be supplied through a brownfields expansion of Grootegeluk mine with mining from the existing opencast pit continuing at an accelerated rate. The coal beneficiation process will be handled by two new dense medium facilities – theGrootegeluk 7 and Grootegeluk 8 beneficiation plants – which will be constructed at the mine.

“The investments by both Eskom and Exxaro will have a significant benefit to the local, provincial and ultimately the South African economy,” said Eskom chief executive Jacob Maroga. “Direct jobs created during construction will peak at about 9 500, with the Eskom investment generating 8 000 and the Exxaro investment generating 1 500 of these jobs. Furthermore, thousands of indirect jobs will also be created during the construction of the power station and the expansion of the mine,” he added.

“We value the co-operative and long-standing relationship that has developed between Eskom and Exxaro, and are pleased to be able to continue this mutually beneficial relationship,” said Exxaro CEO Sipho Nkosi.

Medupi is the first of Eskom’s new generation base-load coal-fired power stations and it will comprise six 800MW generation units capable of supplying 4 800MW of generation capacity to the national grid. Medupi will be the largest air-cooled power station in South Africa, and its first generation unit is scheduled for commercial operation during the last quarter of 2011, with the last unit expected to be in operation in the first half of 2014.