MC Mining says IDC support for Makhado coal project intact
MC Mining says the Industrial Development Corporation of South Africa (IDC) has acknowledged a proposal to extend the repayment period of a loan proviced to develop the company's ZAR575 million ($37.1 million) Makhado hard coking coal project, in Limpopo province.
MC Mining in 2017 secured a ZAR240 million ($15.5 million) facility from the IDC. The company utilised ZAR120 million ($7.7 million) to develop Makhado, including progressing the project to fully permitted status and completing the acquisition of the surface rights required for the mining area.
During August 2020, the company and the IDC agreed to restructure the balance of the Initial IDC Facility and MC Mining drew down ZAR40 million ($2.6 million) and agreed to cancel the balance of the Initial IDC Facility. The first and second drawdowns resulted in the IDC becoming a 6.7% shareholder in the Makhado Project.
The initial drawdown and the second drawdown plus accrued interest were due for repayment by 30 November, 2020. MC Mining has submitted a formal application to extend the repayment period, which the IDC has acknowledged.
“The IDC is supportive of the development of Makhado,” said Brenda Berlin, interim CEO of MC Mining.
Financing coal projects in South Africa has become increasingly difficult. IDC, which is owned by the South African government, said in October that it was pulling its support for the ZAR4.2 billion Boikarabelo thermal coal project which is being developed by Resource Generation, a Sydney- and Johannesburg-listed firm.
The IDC said at its annual results presentation in October that it was tightening its investment criteria after it had incurred heavy losses for 2020 financial year.
In addition to the difficulties of Resgen’s Boikarabelo project, the consortium behind the proposed 600MW to 1,200MW Thabametsi coal-to-power plant, which included Exxaro Resources, was asked by South Africa’s energy ministry to withdraw the project. This was owing to pressure from environmentalist lobby groups.
