The MoU gives both companies exclusive rights to work with each other on the development of an initial 60 MW independent power producer (IPP) coal power plant and associated 200 km transmission line in southern Madagascar.
It is anticipated that the coal fuel for the power station will be provided from Lemur Holdings' coal mining permit area in Madagascar.
The objective of the MoU includes the development of a bankable feasibility study and a project implementation proposal for the project by Sinohydro, at its own cost within 12 months of signing the MoU.
Both Sinohydro and Lemur Holdings will also have to prepare an environmental impact assessment for the project as well as EPC and O&M contracts for the IPP plant and the EPC contract for the transmission line within 18 months.
Lemur Holdings will continue the development of its mine in order to supply coal to the Imaloto IPP.
Lemur Holdings has completed a conceptual study; followed by more detailed pre-feasibility studies (PFS) for the mine, power plant and transmission line. These studies demonstrated favourable project economics, including the existing and future demand for electricity in the area.
Sinohydro will use its expertise in power plant and transmission line engineering and construction to build on the work already done by Lemur Holidngs in the PFS.
The project stands to have a transformational impact on Madagascar. At present, no electricity grid exists in the southern part of the island.
The project would be able to not only supply electricity cheaper to existing mining and industrial operations in the region, but to also deliver electricity to tens of thousands of people currently without access to power.
Realising this, the Madagascar power utility, Jirama, is currently negotiating an off-take agreement with Lemur Holdings for electricity for the IPP.
“This is another example of the progress Bushveld Minerals has made across its platforms in 2017, in what we forecasted as a pivotal year,” comments Bushveld Minerals CEO Fortune Mojapelo.
“The MoU signing is a step forward in the development of our coal mine and power plant project in Madagascar. Sinohydro and its parent company PowerChina, bring a wealth of technical expertise in building such projects and bringing them into operation.
“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. We look forward to working with Sinohydro and the Madagascar authorities in implementing the project and realising its immense positive social impact it will create.”
“As a major breakthrough for the energy sector of Madagascar, this project will help solve the problem of power shortages and contribute to local economic growth in the south of the country,” states Liu Kai, Sinohydro vice-president.
“Sinohydro, with rich experience in thermal power field, is ready to help Lemur Holdings 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.”