Benga Power Plant in Mozambique is set to supply a mining company with 200MW of power once it is operational. This is after Kibo Energy, the company behind the project signed a binding agreement with Baobab Resources Ltd (‘Baobab’) to supply the power to its Tete Steel and Vanadium Project (‘TSV Project’) in Mozambique.
Located approximately 36km away from Benga, TSV is being developed to produce half a million tonnes of construction steel per annum and is construction-ready with all licences, concessions, and agreements in place. This is recognised as a key development project in Mozambique and is set to be the anchor industry for the Revuboe Industrial Free Zone (‘RIFZ’), Mozambique’s newest and largest industrial zone.
Terms of the agreement
Under the the Agreement, which is valid until 30 September 2020, Baobab agrees to exclusively deal and negotiate with Kibo with regard to entering into the proposed PPA. Kibo can continue to seek and secure other PPAs, including the agreement it is currently pursuing with Mozambican state-owned electric utility Electricidade de Mocambique (‘EDM’) provided that such agreements do not negatively affect the uninterrupted supply of 100% of the energy needs and requirements of the TSV Project.
According to Louis Coetzee, CEO of Kibo, they are delighted to have secured this strategically important agreement with Baobab. The TSV Project represents one of Mozambique’s key development projects that could contribute significantly to the growth of the country. “We are quite delighted that our Benga project will be supporting this growth by providing 100% of TSV Project’s c. 200MW energy requirements, subject to reaching final agreement on an appropriate PPA. This PPA will be one of a number of supply agreements we are targeting for Benga, in line with our commitment to creating reliable, sustainable and affordable electricity in Mozambique and we look forward to providing further updates in due course as these agreements progress,” he said.
He further added that it is envisaged that the c. 200MW requirement of the TSV Project will be developed as part of the existing Benga Power Project, and talks are currently underway with JV-partners in Benga, to determine whether the latest addition to the Benga portfolio will have any impact on the economic interest of each JV partner, given Kibo’s added efforts in increasing the utilisation of Benga.