Name and Location
Mbeya (formerly Rukwa) coal-to-power project (MCPP), Tanzania.

Client
Kibo Mining.

Project Description
The project comprises two prospecting licences and two prospecting licence applications in south-western Tanzania, just south of Lake Rukwa.

Kibo is undertaking a twin-track development at Mbeya.

Rukwa has total in situ resources of 109.39-million tons of coal, with the coal to be fed into a 250 MW to 300 MW mine mouth thermal power station.

Seven different coal seams exist for the Rukwa coal mine.

It has been proven that a constant coal production over the total life-of-mine can be achieved.

Phase 2, Stage 1 of a prefeasibility study (PFS) on the intended Rukwa coal mine completed in August 2015 has identified four possible mining methods for the development of the mine.
• Option 1 – surface miner, contractor, no crushing.
• Option 2 – surface miner, owner mining, no crushing.
• Option 3 – free dig, contractor mining, crushing.
• Option 4 – free dig, owner mining, crushing.

The differences in the options are mainly applicable to alterations in mining operating costs and mining capital costs, with the project financially feasible for all the options.

The mining project has been assessed for a 28-year mine life, with average coal production estimated at 1.48-million tons over the life-of-mine.

Meanwhile, a prefeasibility report on the project’s thermal power station component recommends the installation of two 150 MW units.

The report further indicates yearly power generation of between 1 841 GWh and 1 877 GWh, and an additional mineral resource sufficiently large enough to potentially double the current design size to 600 MW or to be used in alternate energy-conversion technologies.

Net Present Value/Internal Rate of Return
Applying a real discount rate of 5.5%, the Phase 2, Stage 1 PFS’s best estimated net present value (NPV) ranges from $211-million to $244-million, with an internal rate of return (IRR) ranging from between 33.6% and 53.9%, with payback ranging from 2.6 years to 3.65 years.

Indicative life-of-plant revenues for the thermal power station are estimated at about $7.8-billion to $8.4-billion.

The PFS on power station project estimates an indicative NPV, at a 15% discount rate, of between $230-million and $280-million, an indicative pretax equity IRR of more than 23%; and an indicative post-tax payback of eight to nine years.

Value
The MCPP technical report estimates a required capital investment of between $46-million and $89-million, and yearly coal sale revenues of between $37-million and $44-million, depending on the selected development option.

The total capital cost of the thermal power plant is estimated at between $640-million and $760-million, depending on the plant configuration.

Duration
Not stated.

Latest Developments
Kibo expects its MCPP to produce electricity at “well below” national electricity tariffs.

“Tanzania has varied electricity tariffs; it can be anything form $0.18/kWh to $0.35/kWh, but our project will come in well below the existing going rate,” CEO Louis Coetzee has told Mining Weekly Online.

Kibo is in negotiations with power utility Tanzania Electric Supply Company, as well as other potential private offtakers, regarding the conclusion of power purchase agreements.

Coetzee has said there is also potential to export power to neighbouring countries, but, in the short term, any electricity generated by MCPP will be used to meat Tanzania’s electricity demand.

Meanwhile, he has described the African country’s approach to independent power producers as “very progressive”.

Meanwhile, a definitive feasibility study on MCPP wis expected to be completed in October.

Coetzee has said Kibo will appoint contractors to build and operate MCPP only once the company has started to obtain funding for the construction of the project.

Kibo has indicated that it will strive to use as many suppliers from Tanzania and Southern African Development Community countries as possible.

The company is expecting to fund the project on a 75:25 debt-to-equity ratio and was working closely with its financial advisers, including Standard Bank, in preparation for the process of securing financing.

Key Contracts and Suppliers
Standard Bank (financial adviser).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Kibo Mining, tel +353 91 865367, fax +353 91 755066 or email info@kibomining.com.