Bushveld Minerals to develop coal power plant in Madagascar

AIM-listed Bushveld Minerals has partnered with Sinohydro Corp, a Chinese state-owned hydropower engineering and construction company, to develop a coal power plant in southern Madagascar.

The company’s subsidiary Lemur Holdings signed a memorandum of understanding with Sinohydro to develop an initial 60 megawatt independent power producer coal power plant and a 200km transmission line.

Bushveld said the project could be “transformational” for Madagascar as it does not have an electricity grid in the southern part of the island. It added that the plant supply electricity cheaper to existing mining and industrial operations in the region, as well as deliver electricity to tens of thousands of people currently without access to power.

Madagascar power utility, Jirama, is currently negotiating an offtake agreement with Lemur for electricity for the independent power producer.

It is anticipated that Lemur's coal mining permit area in Madagascar will provide coal fuel for the power station.

A bankable feasibility study and a project implementation proposal for the project will be developed by Sinohydro, at its own cost, within 12 months, and both companies will prepare an environmental Impact assessment

The companies will also secure both debt and equity funding for the project and potentially establish a future joint company on the completion of the bankable feasibility study, in which Sinohydro's parent company, PowerChina, may buy a stake in.

Lemur will continue the development of its mine in order to supply coal to the Imaloto independent power producer.

Sinohydro vice president Liu Kai said: "As a major breakthrough for the energy sector of Madagascar, this project will help solve the problem of power shortage and contribute to local economic growth in the south of the country.

“Sinohydro, with rich experience in thermal power field, is ready to help Lemur complete preliminary work. We both hope the project can move forward into the next stage as soon as possible with the strong support of Madagascar government."

Bushveld chief executive Fortune Mojapelo added: "The MoU reinforces the commercial merits of the project and the bankable feasibility study will add significant value to the development of the power project.”

Shares in Bushveld Minerals were up 8.53% to 7.95p at 0905 BST.