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OECD 10th Plenary - Cronimet 25 June 2018 RENEWABLES IN EXTRACTIVES

OECD 10th Plenary - Cronimet 25 June 2018 RENEWABLES IN EXTRACTIVES. Contents. 1. Corporate Overview. 2. Power Generation Options. 3. Driving Forces behind Energy Prices. 4. PPA Challenges. 5. Contact. CORPORATE OVERVIEW CRONIMET Mining Group.

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OECD 10th Plenary - Cronimet 25 June 2018 RENEWABLES IN EXTRACTIVES

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  1. OECD 10th Plenary - Cronimet 25 June 2018 • RENEWABLES IN EXTRACTIVES

  2. Contents 1. Corporate Overview 2. Power Generation Options 3. Driving Forces behind Energy Prices 4. PPA Challenges 5. Contact

  3. CORPORATE OVERVIEW CRONIMET Mining Group CRONIMET Mining Group - Four Business Units Four Business Units Trading Mining Processing Energy Trading Services Quality & Traceability Prospection and Sourcing Development Operations Steel Slag Recycling Ferro Alloy Slag Recycling Metall Recovery CRONIMET POWER SOLUTIONS Renewable Energy IPP Development EPC and O&M Energy Efficiency 3 STRICTLY CONFIDENTIAL

  4. CORPORATE OVERVIEW CRONIMET Power Solutions In-House Engineering & Development Expertise • PV/Diesel hybrid (off-grid utility scale) • PV mini-grids (rural off-grid utility scale) • PV (on-grid utility scale) • IPP development (greenfied to financial closing) • EPC and O&M services to IPP • IPP equity (strategic investments) • Rural energy access solutions Comprehensive Solar Solutions Deep Market Knowledge and Strong Relationships • Business and project development across Africa • PV development in 21 Sub-Saharan African markets • 4 offices in Africa – Cape Town, Windhoek, Gaborone, Abidjan • Private Sector Enterprise (industrial & mining) • State and private utilities • Rural Electrification Authorities Broad Spectrum of Clients Across Industries • KfW/DEG and CRONIMET partner to support the proliferation of PV and socio-economic capacity building throughout 20 African countries Official Partner 4 STRICTLY CONFIDENTIAL

  5. CORPORATE OVERVIEW CRONIMET Team CRONIMET Offices Executive Team HQ Rollie Armstrong Managing Director Steffen Kammerer Managing Director Sabrina Steinhauser Corporate Manager Management Team NkosiNcube Ex. Director CRMPS SA David Robinson Head of Business Development Southern & East Africa Luc Tanoh Head of West Africa Ex. Director WA Alex Vassev Head Of SADC Head of Legal & Compliance GABORONE Project, Finance & Technical Team LonwaboNtshiba Jr Draftsman Daniel Ambros Sr Technical Manager Dr. Georg Wirth Technical Director DarinaDecheva Manager Project Finance & Strategic Capital Vanda Suwanapak Project Manager Administrative Team Chevon Koopman Commerical Assistant Valeria Vitale Team Assistant Michelle Deville Assistant to the Management 5 STRICTLY CONFIDENTIAL CAPE TOWN WINDHOEK ABIDJAN

  6. CORPORATE OVERVIEW IPP Development Process START Enter IPP Cooperation Agreement Full Feasibility & Financial Term Sheets PPA MoU & Regulatory PPA Term Sheet & IPP Permitting Execute All Contracts & Financial Close Power Plant Construction Operations & Maintenance PLANT CONSTRUCTION AND OPERATION IPP DEVELOPMENT PROCESS Off-Balance Sheet Build, Own & Operate No capex investment for PPA client IPP is the owner of the power plant assets 6 STRICTLY CONFIDENTIAL

  7. Contents 1. Corporate Overview 2. Power Generation Options 3. Driving Forces behind Energy Prices 4. PPA Challenges 5. Contact

  8. What it takes to Power a Mine The Old Electricity – Grid Supplied HFO / Diesel / Gas – Embedded Thermal Generation OR Inefficient Mining Load Diesel Dependent Operating Costs

  9. What it takes to Power a Mine The New More Cost Effective, Reliable Hybridized Energy Solution Prime Grid Energy Prime Renewable Energy Standby/Prime Thermal Energy Optimised, Efficient Mine Load Diesel Dependent Operating Costs

  10. Contents 1. Corporate Overview 2. Power Generation Options 3. Driving Forces behind Energy Prices 4. PPA Challenges 5. Contact

  11. What drives Energy Prices? LCOE in a nutshell The levelised cost of electricity (LCOE) is not to be confused with the PPA price – LCOE = Method used to compare various generation designs/technologies using a NPV PPA Price = The price you will be paying for generation capacity in the first year of your PPA Diesel Dependent Operating Costs

  12. What drives Energy Prices? Relative Cost Comparisons – We know that Investment Costs Coal = Extremely High HFO = High PV = High (One-time investment) Gas = Medium Diesel = Medium Fuel Costs Coal = High / Volatile HFO = High / Volatile Diesel = High / Volatile Gas = Medium / Volatile PV = FREE (natural energy hedge) Maintenance Costs Coal = Extremely High HFO = High Diesel = High Gas = High PV = Extremely Low (zero variability) Diesel Dependent Operating Costs

  13. What drives Energy Prices? What we rarely look at…….. • Important LCOE Considerations • Time (t) – • Correlates directly to Life of Mine (LOM) • Longer LOMs can achieve reduced energy costs over life • Technology Complexity – • Mines are not in the business of running power generation facilities • Debt and Risk – • Greater uncertainty requires increased guarantees from off takers or higher returns on debt are required • Grid Connection Cost • Impact on real energy costs Diesel Dependent Operating Costs

  14. What drives Energy Prices? Examples of LCOE study for client…… Diesel Dependent Operating Costs

  15. Contents 1. Corporate Overview 2. Power Generation Options 3. Driving Forces behind Energy Prices 4. PPA Challenges 5. Contact

  16. PPA Drivers • A) Drivers: • Cost of production • LCOE (we saw earlier) • Warranties • Bankable Warranty • Security • None recourse • Interest rates • 2%, 5%, 10% • Country Risk • Bankable Document • Legal Frame Work • Responsibilities of the parties

  17. PPA Drivers • B) Drivers: • Life Time of the Mine • Market Price of the Commodity • Most of the mines stop production when price goes down • Take or Pay doesn’t allow for it • PPA Term: 15 years or Plus • DEBT Tenor • Introducing a second Off Taker to minimize the risk • Legal issues • Regulatory Framework • Licences • IPP/interconnection • Authorizations (State Utility)

  18. Contact Thank You Rollie Armstrong ManagingDirector CRONIMET Mining Power Solutions GmbHOttobrunnerStr. 3982008 Unterhaching Tel.: +49 89 919 290 173Mobil: +49 176 6091310 6Email: rollie.armstrong@crm-ps.com Luc Tanoh Head of West Africa CRONIMET Mining Power Solutions Abidjan (IvoryCoast), Paris (France) Mobil (FR): +33 6 71 86 00 66 Mobil (ABJ): +225 05 99 22 66 Email: luc.tanoh@crm-ps.com

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