MAC: Mines and Communities


Published by MAC on 2009-12-06

Country mining profile #1

Some 77% of all the electricity generated in Africa's "richest" state derives from the burning of coal, derived from both underground and open cast mines. According to the South African government, 28% of the country's production is sold overseas - making it the fourth most important global coal exporter.

Yet, as South Africa's president Jacob Zuma prepared to head for the 2009 global climate summit in Copenhagen, his office announced an increase in the country's greenhouse gas emissions until 2020 - at which point it would aim for a "plateau" and diminution of emissions thereafter.

Last week the World Bank said it would "expedite" the largest loan it's ever granted for a post-apartheid South African project, so long as the US$3.75 billion package is okayed by its board next March.

More than three quarters of the loan will go to building a massive 4.8 MW coal-fired power plant in Limpopo province - where much of the country's platinum and palladium group metals' mining is located.

Only $260-million of the loan is earmarked for "renewable energy sources", while nearly half a million dollars is destined for "low-carbon energy components". However, some of this will go towards road to rail coal transportation  - hardly a recipe for diminishing the country's overall carbon toll. See also:

World Bank to expedite $3,75bn Eskom loan


3 December 2009

The World Bank is to expedite a $3,75-billion loan for South African power utility Eskom and to present it for approval in March 2010, a World Bank official said on Wednesday.

The official told Reuters the loan proposal would be presented to the World Bank board in March. The loan, which will be guaranteed by the government, is intended to help the state-owned utility with a critical $51,4-billion power supply expansion to enable it to meet fast-rising demand.

If approved, it would be the largest World Bank loan for a project in post-apartheid South Africa.

The country's President Jacob Zuma wrote to World Bank head Robert Zoellick last month asking for the financing to be expedited, the official said.

According to World Bank documents, the loan would come at a time that access to international credit markets are still constrained by the global financial crisis.

The documents show that Eskom is seeking about $16,9-billion in financing, including the $3,75-billion from the World Bank, $2,6-billion from other multilateral institutions and another $1,6-billion through bilateral agreements with other countries and commercial financing.

South Africa, the world's top platinum producer and a major gold producer, has been hard hit by power shortages that last year crippled its mines. It has said it will rely on borrowing from capital markets and government loans to fund the expansion.

The $3,75-billion project will be financed through the International Bank for Reconstruction and Development, the World Bank's financing arm for credit-worthy poorer countries and emerging market economies.

The bulk of the loan -- some $3-billion -- will go to developing the Medupi coal-fired power station, a 4 800 MW plant.

Another $260-million will go toward developing renewable energy sources such as wind and solar power, and $490-million for low-carbon energy components such as road to rail coal transportation and power plant efficiency improvements.

The World Bank said the project meets its criteria for supporting coal power projects and is in line with the institution's development and climate change framework.

It said the plants will use the cleaner coal "supercritical" and "carbon capture storage ready" designs, the same technologies used in advanced countries.

Eskom has already been approved for $2,81-billion in financing by the African Development Bank for the Medupi power project, the first new base-load plant in more than two decades. Medupi is in South Africa's northern Limpopo Province and is expected to be commissioned by February 2012.

Edited by: Reuters

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