Madagascar is one of the world’s largest islands and home to 25-million people as well as other unique species, which makes it one of the most biodiverse places on the globe. Beautiful it may be,  regarding electrification Madagascar is far behind its peers and one of the least electrified nations on the continent with a rate of just 15%.

Lemur Holdings, a subsidiary of SA born and London-listed Bushveld Minerals, is looking to change that and its plans to provide coal-fired power to the southwest of the country by 2021 are steaming ahead.

Bushveld Minerals took over Lemur Holdings in 2015, and with it, a 136-million ton coal asset in Madagascar.

“Bushveld acquired Lemur and the coal asset initially to export coal, but when we did our business case we realised it made more sense to generate our own demand by putting a ‘mine mouth’ power station there [where] you pretty much just feed the coal from the mine to plant on a conveyor belt,” says Lemur CEO Prince Nyati. 

The power station, the Imaloto Power Project, will be positioned in the southwestern Toliara Province. This area is particularly underdeveloped and has no electricity infrastructure after a small hydro plant there was decommissioned. 

Final touches are being applied to a bank feasibility study, which was prepared by Lemur’s co-developer Sinhydro, a subsidiary of Chinese state-owned entity PowerChina. Discussions with various African development financiers are also under way, as is an environmental impact assessment for the project. The price tag is estimated at $160m- $180m, according to the prefeasibility study.

Nyati says a power purchase agreement with the state power utility, Jirama, has been secured for 25MW for a concession period of 30 years, after which the Imaloto  independent power producer will be handed over to the government. The tariff has also been agreed although Lemur cannot disclose it yet.   

“It’s a reasonable tariff and it’s significantly lower than what the consumers in Madagascar are typically used to paying,” says Nyati, who notes the average residential customer in Madagascar would pay $0.25 per kilowatt hour. This is high compared with the average price of electricity in SA, for example, which is  $0.05 per kWh. 

Nyati says Lemur will also build  more than 250km  in transmission lines along the national road, which links the south of the country to the northeast, essentially creating a backbone in electricity infrastructure in the country, which, Nyati explains, has no interconnect power grid.

The installed capacity of the power station is planned to be 60MW and will supply electricity directly to other mining projects in the area  that require electricity to develop resources of graphite, limestone and vanadium. 

“Those are the ones we know of, the ones actually being developed. There are multiple other projects that are in the prospecting stage. The reality is none of these have taken off, I believe, because there is no base load electricity,” Nyati says.

Export coal remains in the plan, but is now a longer-term play.

While Lemur sees a lot of growth potential in Madagascar,  it also confident about SA, where major mining houses are divesting from thermal coal projects and have opened up space for smaller companies to operate.

“There are lots of coal assets that are not developed … and there is huge demand domestically particularly from Eskom,” says Nyati. “So there is an opportunity. And with our experience and knowledge and our ambition as a business, we believe it’s an opportunity for us and it’s a natural fit.”