South African platinum producers received a boost yesterday (8th April) after a $3.75 billion loan was approved for coal-fired power plant in the country.

State power utility Eskom has suffered a number of problems with electricity generation in recent times and narrowly averted an entire grid collapse in January 2009.

However, the World Bank has now approved funding for a 4,800-megawatt facility, known as the Medupi plant, which will be built in the northern Limpopo region.

"Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth," said Obiageli Ezekwesili, the World Bank's Vice-President for Africa.

The approval of the controversial loan arrives despite strong opposition from major shareholder countries such as the US, the UK and The Netherlands.

A statement from the US Treasury outlined its concerns over the project's "incompatibility with the World Bank's commitment to be a leader in climate change mitigation and adaptation".

Meanwhile, a spokesman for the Dutch Foreign Ministry claimed that it was opposing the plans because Eskom should be working harder to develop alternative power sources to coal.

Last month, South Africa's Public Enterprises Minister Barbara Hogan told Reuters that the country's platinum miners are still at risk of black-outs unless co-generation projects come online and energy-saving initiatives prove successful.

Source:

UPDATE 3-World Bank approves controversial Eskom loan (08/04/10)

© Adfero Ltd