[miningmx.com] – JINDAL Steel & Power, a unit of the $17bn Indian
company Jindal Group, finalised its widely expected takeover of Toronto-listed CIC
Energy Corporation in a deal valued at $116m.
The Indian firm said the offer, which also has the blessing of Botswana’s Minerals
minister, Ponatshego Kidikilwe, would put it in line to supply 1,200MW in power to
Botswana.
“This acquisition makes Jindal Africa the frontrunner for building a 1,200MW power
plant in Botswana for the supply of power to South Africa,’ said Ashish Kumar, CEO of
JSPL subsidiary Jindal Africa, in a statement.
Kedikilwe, who doubles as the country’s vice-president, said last month that the
600MW expansions that Botswana was planning this year “cannot be enough,
otherwise the economy will come to a halt’. He added that “we need another 300MW
of power in about two to three years’ time and another 300MW in 2018 to 2020′.
He said that Botswana’s economy across the board, including other infrastructure build
programmes such as the search for water, was delicately balanced. “We are in a
precarious situation that has to be handled dextrously.’
In the short- to medium-term, Botswana’s government has issued two tenders for an
independent power producer to build 300MW (600MW in total) power stations. One
would be a brownfields development near Morupule, the country’s only operating coal
mine.
The investment is a major boost to Botswana’s energy industry, which South African
president, Jacob Zuma, said on a recent two-day visit could help relieve his country’s
power supply deficit.
At some 212 billion tonnes (Bt), Botswana is home to 60% of Africa’s coal resources,
but little in the way of production. However, there are some 190 coal and coal bed
methane prospecting licences issued to 43 companies. These include the likes of
Continental Coal, African Energy Resources, Asenjo Resources and Hodges Resources,
an Australian-listed firm.
CIC Energy’s coal property, the Mmambula coalfield, stands at some 2.4Bt and has
been drilled by CIC Energy more than all other coal properties in the country
combined. However, CIC Energy was frustrated in signing a 30-year, 1,200MW power
supply contract with Eskom, which subsequently led to it suspending the Mmamabula
project. This was despite having ploughed $150m into developing it.
Jindal’s C$2/share offer for CIC Energy was at a premium to the current C$1.70/share
value attached to CIC Energy but far, far lower than the C$17/share at which it was
once traded at.
“This further reinforces Jindal’s philosophy in growing the footprint in Africa,
developing the projects in the continent and thus creating sustainable job
opportunities,’ Jindal Africa’s Kumar said.
In addition to Botswana, Jindal has invested in Mozambique’s coal industry, most
recently winning approval to build a 2,640MW coal-fired power plant in the country’s
Tete province. The plant, which is estimated to cost $3bn, is expected to start
operating in 2015 with the power due to be sold domestically and to the Southern
African region.
