Anglo Coal's US$505m Zondagsfontein coal project may be the curtain-raiser to an even larger development. That's the go-ahead for the New Largo mine, situated on a coal deposit slated to supply Eskom's Project Bravo power station, to be built near Witbank.
In its public presentations Eskom has never identified the geographic location of Bravo - or any other of its proposed new power stations - before they've got the official go-ahead.
In February, the FM incorrectly stated that Bravo was the Mmamabula project, under development by CIC Energy in Botswana. But it has now become clear that Bravo involves New Largo, where Anglo Coal has been carrying out a scoping study and environmental management programme over at least the past year.
A November 2006 draft report on that scoping - which is being done by consulting firm Oryx Environmental - states that "a separate EIA (environmental impact assessment) is being undertaken by Eskom for the power station."
Bravo could be next up for Eskom in its building programme, now that phases one and two of the Medupi power station in the Waterberg are under construction.
Both Zondagsfontein and New Largo are controlled by Anglo Nyosi Coal, the black economic empowerment group created in February.
Anglo Nyosi is 73%-owned by Anglo Coal and 27% by the Inyosi consortium, which consists of four shareholders: Lithemba Consortium (33%), Pamodzi Coal (33%), WDB Investment Holdings (19%) and various rural communities that together own 15%.
Anglo Nyosi was valued at R7bn and consists of the operating Kriel Colliery (which sells 10,5 Mt annually to Eskom) plus four coal projects.
Those are New Largo (reserves of 875 Mt), Elders (376 Mt), Zondagsfontein (268 Mt) and Heidelberg (191 Mt).
In February, Anglo Coal SA GM Ben Magara estimated production from Zondagsfontein at 6 Mt/year and New Largo at 17 Mt/year.
He confirmed New Largo was intended to supply an Eskom power station. Asked about the status of negotiations with Eskom, Magara replied: "We have been in consultation with Eskom and it would be unfair of me to comment as to when we might secure that business."
Interviewed last week, Magara said he could not comment on New Largo and Project Bravo until Eskom had made an announcement.
Zondagsfontein is located near the town of Ogies, west of Witbank, and Anglo Coal now says it will be a multi product operation "positioned in the lowest quartile of the cost curve".
Zondagsfontein will produce 6 Mt/year from underground and opencast operations over an expected 20-year life, of which 3 Mt will be thermal coal for export and 3 Mt will be for the SA domestic market.
Construction should start in early 2008 and production should begin in the second half of 2009, scheduled to reach full output by 2011.
A washing plant - to be known as the Phola Coal Processing Plant - will be built as a 50/50 joint venture between Anglo Nyosi and BHP Billiton Energy Coal.
This plant will handle coal from both Zondagsfontein and BHP Billiton's Klipspruit Colliery. It will be built by Anglo Coal but jointly managed by Anglo Nyosi and BHP Billiton.
New Largo straddles the R545 provincial road between the towns of Kendal and Balmoral, west of Ogies.
According to the draft Oryx report, the R545 road will have to be relocated if the power station/mine development goes ahead according to present planning, along with other existing infrastructure, including power lines, telephone lines and pipelines - especially fuel pipelines.
According to Oryx, the New Largo reserves "will be able to supply Eskom's proposed new power station with its requirement of 16 Mt of coal a year for a period of 40-50 years".
The proposed mining method involves open cast mining in a number of pits distributed over the coal reserves.
According to the presentation given by Eskom CEO Jacob Maroga at the Coaltrans SA conference in September, Bravo will be a 4 500 MW station but is still at the "feasibility business case-contract concluding" stage.
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