Mineral development company Bushveld Minerals’ wholly-owned subsidiary Lemur has signed a memorandum of understanding (MoU) with Sinohydro.

Under the deal, the companies will jointly develop an initial 60MW Imaloto independent power producer (IPP) coal power plant and associated 200km transmission lines in southern Madagascar.

Coal for the power station is expected to be procured from Lemur's mining permit area in the East African country.

Sinohydro's vice-president Liu Kai said: “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.

“Sinohydro, with rich experience in thermal power field, is ready to help Lemur complete preliminary work. We both hope the project can move forward into the next stage as soon as possible with the strong support of the Madagascar Government.”

"This project will help solve the problem of power shortages and contribute to local economic growth."

The objectives of the MoU include development of a bankable feasibility study (BFS) and a project implementation proposal (PIP) by Sinohydro within 12 months of signing the agreement.

Further objectives include preparation of an environmental impact assessment and preparation of both engineering, procurement, and construction (EPC) and operations and maintenance (O&M) contracts for the plant, as well as an EPC contract for the transmission line within 18 months.

Under the terms of the MoU, the two companies will work together to secure both debt and equity funding for the project, while Lemur will continue to develop its mine in order to supply coal to the Imaloto power plant.

Once operational, the project will not only help provide cheaper electricity to existing mining and industrial operations in the region, but will also supply power to tens of thousands of people who currently have no access to any electricity grid.