Eskom, Exxaro ink coal agreement

22 September 2008

South African state-owned electricity company Eskom and diversified mining group Exxaro Resources have signed a coal supply agreement for Eskom’s Medupi base-load power station, currently being built in Lephalale in Limpopo province.

The coal for Medupi will be supplied through a brownfields expansion of Exxaro’s Grootegeluk mine – situated near Lephalale – with mining from the existing opencast pit continuing at an accelerated rate. Over the next 40 years, the mine will supply an average of 14.6 tons of power station-grade coal to Medupi per year.

The coal beneficiation process will be handled via two new dense medium facilities, the Grootegeluk 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,” Eskom CEO Jacob Maroga said in a statement this week.

“Direct jobs created during construction by both investments will peak at about 9 500 with the Eskom investment generating 8 000 and the Exxaro investment generating 1 500 of these jobs.”

Exxaro’s capital expenditure for the project is estimated at R9-billion, and production is planned to begin in the third quarter of 2009, with a ramp-up to full production capacity by 2014.

“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 Exarro Resources CEO Sipho Nkosi.

“We estimate that about 550 permanent jobs will be created at the Grootegeluk mine.”

Medupi is the first of Eskom’s new generation base-load coal-fired power stations, and will comprise six 800MW generation units capable of supplying a total of 4 800MW of generation capacity to the national grid.

It will be the largest air-cooled power station in South Africa. 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.

SAinfo reporter