[miningmx.com] – UK-listed coal group Ncondezi Coal Company said it would press ahead with a $627m thermal coal project in Mozambique’s Tete province following completion of a definitive feasibility study that also recommended the mine be constructed in phases.
The mine will produce 18 million tonnes a year (Mtpa) run-of-mine (ROM) domestic and export thermal coal most of which would be supplied to a power plant Ncondezi Coal had earlier this year announced it would build.
This was following a separate definitive feasibility study which recommended a phased approach to the power plant build which would consist in its first stage of a 300MW unit requiring the supply of 2Mtpa ROM from the coal mine.
Construction of the power plant was targeted to start in 2014 with commission anticipated by 2017, Ncondezi Coal said. Capital expenditure for the power plant was being refined in addition to the search for a strategic partner, but initial indications is for an $504m outlay for 300MW.
Capitalising on the fact Mozambique’s electricity market is expected to grow by 2,000MW over the next 10 years, Ncondezi Coal said the power plant could be expanded in 300MW increments to 1,800MW by 2023 for a total outlay of $2.25bn. This excludes transmission lined which will cost a further $247m.
“Mozambique is the fastest growing electricity market in southern Africa and the largest exporter of power to South Africa,” said Nigel Walls, CEO of Ncondezi Coal.
“We believe that focusing on a 300MW integrated mine and power plant as the first phase of development is the best route to bring the Ncondezi’s project into production by 2017,” he said in an announcement.
Walls said that the company had engaged with over 20 potential strategic partners following a roadshow to Korea, China and India. The strategic partner search had also been extended to include international integrated power producers and developers as well as financial investors in the power sector.
A priority for 2013 was to “optimise’ the capital expenditure for the 300MW project as well as completion of a power purchase agreement with Electricidade de Mozambique (EdM), a local authority, ahead of project funding in the second half of 2013.
The decision to phase the development of the coal mine comes as coal prices had pulled back in the second half of 2012, while development of Mozambique’s infrastructure had not progressed as quickly as planned.
Crucially, Ncondezi’s proposed coal mine is only 500m away from the proposed site for the power station, effectively derisking the project’s exposure to infrastructure bottlenecks in Mozambique.
Mozambique’s transport and logistics utility, CFM, has been more than 18 months late expanding the Sena rail route to 6.5Mtpa from 2Mtpa that links the coal-rich Tete province to Beira on the coast. A number of other rail routes are also planned including two that run 700km to 800km from Tete province to Nacala in the north of Mozambique.
