UK-based energy and mining company Edenville Energy (AIM:EDL) recently signed a Memorandum of Understanding (MoU) with Chinese hydropower company Sinohydro Corporation for codevelopment of the Rukwa Coal to Power Project in southwest Tanzania.
“The MOU sets out the basic terms to build a strategic partnership between Edenville and Sinohydro with the aim of then proceeding to a formal Joint Development or Joint Venture Contract, where Sinohydro will have the role of EPC (Engineering, Procurement and Construction) contractor for the Project,” Edenville indicates.
The MOU is valid for 18 months until July 19th, 2018 and gives both companies exclusive rights to work with each other on the project during this time.
The tasks to complete predevelopment will be shared by the two companies, depending on the relevant experience and specialization of each of Edenville and Sinohydro.
Throughout the MOU period, Edenville will retain all its ownership rights, shareholdings and control of its coal deposit.
Edenville notes that Sinohydro has previously committed considerable time and resources to the Rukwa Coal to Power Project.
In H2 2016, prior to signing the MOU, Sinohydro carried out extensive review work on site along with completing a technical proposal and an independent financial model.
As part of its commitment pursuant to this MOU, Sinohydro will complete a Bankable Feasibility Study (BFS) at the cost of approximately USD1m for the proposed Rukwa Power Plant.
Edenville will be responsible for the continued development of the coal mine portion of the project along with the permitting and legal aspects to advance the power plant to its construction phase.
Rufus Short, CEO of Edenville Energy, commented: “I am extremely pleased that we have been able to develop our working relationship with Sinohydro over the later part of 2016 when they carried out extensive feasibility work, culminating in the signing of the MOU. We can now advance together and move the Project to the stage where the goal is a formal EPC contract and the subsequent development of the Project.”
“Sinohydro’s broad experience in Africa and its presence in Tanzania for over a decade give us the confidence that we have joined with a group that can bring many positive benefits to the Project and execute the construction process efficiently and cost effectively,” he added.
Rukwa Coalfields Project
At the beginning of 2016, Edenville Energy was granted with a mining license by Tanzania’s Ministry of Energy and Minerals (MEM) to develop its Rukwa coalfields project in the country’s south western region.
“Whilst the Company’s Rukwa coal resource could support a larger power plant it is currently envisaged that a plant in this range [120–135MW] will be the best option to establish power generation in the shortest possible timescale,” Edenville indicates.
Tanzania currently generates less than 1% of its total installed capacity of 1,754MW from coal-fired power plants that are fully supplied by imported coal according to the African Development Bank (AfDB).
In 2013 Tanzania imported USD1.35m of coal briquettes to supply its coal-fired power plants, mostly from Malawi, accounting for 86% of the total imported according to the Massachusetts Institute of Technology (MIT).
According to Edenville, the Rukwa Coalfields could potentially help diversify Tanzania’s energy feedstock in partnership with a power provider.
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