There has been some confusion in the energy industry this past week after the announcement that a new coal-powered power plant is planned for Limpopo.
According to reports, President Cyril Ramaphosa inked a deal with the Chinese to build a new 4,600-megawatt coal power station during his visit to that country.
This came as a shock, as the brand-new Integrated Resource Plan (IRP) does not include any new coal-fired power plants.
It has since emerged that the planned new power plant, called the “Power China International Energy Project”, won’t produce electricity for South African households and business – it will only be used for a massive new Chinese-controlled industrial park.
Earlier this year, nine Chinese companies committed to invest $10 billion in the Musina-Makhado special economic zone at a signing ceremony in Beijing.
The companies are specifically investing in a large new planned ferroalloy industrial park, which will span 60 square kilometres on an area outside Musina.
According to the Chinese website for the South African Energy and Metallurgical Special Economic Zone (EMSEZ), as it is called, the park will contain:
A coal washing plant (with capacity to process 12 million tonnes per year)
A coking plant (3 million tonnes)
An iron plant (3 million tonnes)
A stainless steel plant (3 million tonnes)
A Ferro manganese powder plant (1 million tonnes)
A ferrochrome plant (3 million)
A limestone plant (3 million)
An apartment building, hotel, shopping mall, hospital and school will also be built.
Included in the plans is the new coal-fired power plant, which according to the EMSEZ website, will be built “specifically for the project”. According to the information on the site, it does not look as if it will deliver electricity to the rest of South Africa.
“I can see no rational basis for the power plant,” says dr. Grové Steyn, managing director of Meridian Economics and one of South Africa's leading energy and infrastructure economists.
Firstly, there is currently a surplus of electricity available on the network – the Chinese project wouldn’t have to generate its own power.
In addition, coal will be the more expensive option for the Chinese investors. Steyn says it is highly unlikely that a new coal power station will deliver cheaper energy than new renewable power projects on the national transmission grid, backed up by gas turbine generators.
“A coal-powered power station will create fewer jobs than renewables and will obviously have massive implications for the health of local communities and the broader environment – which is unnecessary given that there are cheaper and cleaner alternatives.”
Work on the power plant is supposed to start this year.
According to the EMSEZ website, investors are attracted to the project because of the nearby coking coal reserves (estimated at 10 billion tonnes) as well as SA's chrome reserves (83% of the global reserves) and manganese resources (81% of total global reserves). Water from the Limpopo River, 30km away, will be used in the project.
The participating companies will get substantial tax breaks: apart from VAT and import duty relief, they will pay a reduced corporate tax rate of 15%, instead of 28% for SA companies.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
“In short, the SAP proposes a structured research programme in this six key areas that will be used to strengthen policymaking, capacitate South Africa, ensure that negative environmental impacts are minimised and support emergence of shale gas industry.
“The SAP focuses on the development of new knowledge in the science, governance and engineering fields as it relates to safe extraction of natural gas from the Karoo basin. More importantly, the SAP acknowledges work that is being done.”
Kubayi-Ngubane said the department seeks to support a sustained research and development programme for the burgeoning offshore oil and gas industry and offshore geoscience in general.
She said burgeoning offshore oil and gas will be done while prioritising the use of South African human capital, technological resources and the building of local capacity [skills and competency].
“We believe that our country has huge potential in the oil and gas industry. Working together as government and the private sector not only will we ensure security of supply of energy, but we also ensure that we begin to deal with the triple challenge of poverty, unemployment and inequality.
“Following the Presidential Investment Summit, we as government are committed to providing the necessary support to the private sector through policies and other means so that we can all grow our economy.”
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
South Africa is on the verge of “collapse” amid rolling blackouts and warnings a total power grid failure could lead to mass rioting on the scale of a “civil war”.
Western embassies including the United States and Australia have advised their citizens in the country to stock up on “several days’ worth” of food and water and be on high alert during extended blackouts sweeping the country. New Zealand’s Ministry of Foreign Affairs and Trade advises “exercise extreme caution” due to strikes and demonstrations. “There have been outbreaks of violence primarily directed toward refugees and other African migrants throughout South Africa. Violence could occur again at short notice and bystanders could be caught up.”
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