Mining Weekly

The disruption in copper production in Central Africa over the past two years – the result of power failures owing to the lack of infrastructure in the Copperbelt – has led to the construction of power plants in the Democratic Republic of Congo (DRC) and Zambia, says research and consulting services company Wood Mackenzie.

“Following the significant boom in investment in the Copperbelt from 2004 to 2007, it became an important region for copper development. However, production growth is limited by the lack of power plants and the road and railway infrastructure needed to match smelting capacities in the Copperbelt. This has led to the need for large infrastructure investments in the DRC and Zambia,” notes Wood Mackenzie copper cost services analyst Bolade Olu-Adeyanju.

He adds that, as a result of the investment boom, major power plant projects, such as the Ndola heavy fuel oil (HFO) plant and the Kabompo Gorge hydropower plant, both in Zambia, as well as the Inga III hydroelectric project, in the DRC, have materialised.

Last year, Africa news content website allAfrica reported that research and investment company Ndola Energy Company appealed to the Zambian government to upgrade the Ndola HFO power station so that it could produce 100 MW. The initial plans were to generate 50 MW of electricity for sale to Ndola consumers.

Ndola Energy Company production manager Anders Longhorn says the company appealed to the Zambian government to consider allowing the power station to double its capacity to avoid power shortages and enable smelters operating on the Copperbelt to be more efficient.

“Ndola Energy Company has invested more than $60-million in the construction of the first-ever HFO power plant in Ndola, which is conveniently situated near Tazama Pipelines and State-owned oil refinery Indeni oil refinery’s plants. The company will source its feedstock through a 286-m-long oil pipeline from Indeni,” he notes.

In February this year, interdisciplinary academic journal Africa Review reported that Ndola Energy Company had completed the installation of step-up transformers, which were expected to generate electricity in April.

Longhorn notes that the electricity will then be connected to the national electricity grid through the Zambia Electricity Supply Corporation’s (Zesco’s) Skyways substation and sold to Ndola-based electricity consumers.

Kabompo Gorge Hydropower Plant
With the Zambian government realising that hydropower is the most appropriate power generation medium to ensure the country’s continued economic growth, plans to increase the country’s power generation capacity are currently under way.

Online news publication Infrastructure News reported in October that construction of the Kabompo Gorge hydropower plant, situated in Zambia’s Northwestern province, was scheduled to start in 2014 and was an early indicator of other large projects in the pipeline.

The publication further reported that South African consulting engineering firm GIBB had played an administrative and facilitative role in the project and was in the final negotiation stages of the engineering, procurement and construction (EPC) process with preferred contractors at that time.

“Owing to the risk of unforeseen geological conditions in the area, we acknowledged that the nature of the contract could result in excessively inflated tendered prices or few bids being submitted. “With this in mind, a modification to the standard contract was prepared as an option that allowed for geological risk sharing, which resulted in competitive bids being submitted,” explains GIBB project manager Sean Renecke.

Once finalised, GIBB, in a joint venture with engineering consultancy Knight Piésold and project management and consulting engineering firm Royal HaskoningDHV, will facilitate the technical construction of the Kabompo Gorge hydropower plant with a team of office-bound designers and a group of supervisors on site.

“Hydropower in Zambia is very important, as the country has an estimated 6 000 MW potential of hydropower capacity and only a third of it has been developed,” notes Renecke, adding that the 40 MW Kabompo Gorge hydropower project will incorporate a 50-m-high dam and significant underground works. The project is expected to create development opportunities for the districts surrounding the project area and it will be connected to the main Zambian electricity grid through a transmission line to a future Zesco substation at Kalumbila.

Significant progress is expected in the selection of an EPC contractor and in the further development of project documentation and site preparation activities. Some EPC activities have already started under an early works agreement, while the main construction works is expected to begin by February 2014 and will continue for 32 months, Infrastructure News noted.

Inga III Hydroelectric Plant
The construction of the first phase of the hydroelectric project at Inga III, in the DRC, is likely to begin in October 2015, according to The Africa Report.

In February 2010, the energy Ministers of the DRC, Angola, Botswana, Namibia and South Africa decided to abandon a project, dubbed the Western Corridor, that would have led to the construction of an electricity interconnection system along the Atlantic Ocean, starting at a third hydroelectric dam at Inga, in the DRC’s Bas-Congo province.

Creamer Media’s Research Channel reported last month that, following the signing of the Grand Inga Hydropower Project Treaty, the South African and DRC governments were planning a series of engagements with other countries in Southern Africa to assess their role or interest in participating in the revived project.

South Africa, through State-owned power utility Eskom, has committed to taking an initial 15% equity position in the first 4 800 MW phase of the project and to supporting efforts that will secure funding for the scheme.

Significantly, Eskom has also committed to a power purchase agreement for an initial 2 500 MW, with the 2 300 MW balance to flow to the DRC. In addition, offtake commitments for a minimum of 30% of any future phases have also been agreed, with experts estimating that the Congo river has hydropower potential of about 44 000 MW.

The South African Cabinet has welcomed the treaty, saying the project will increase energy access to support agriculture, mining and manufacturing in Africa.

In addition, Energy Minister Dikobe Ben Martins told Engineering News last month that there is a sense of optimism that the scheme, which has had several false starts, is poised to move forward under the treaty framework.

Bilateral meetings have already been held with Angola and are being planned with transit countries Zambia and Zimbabwe. Meetings will also be held with countries such as Botswana, Namibia and several other East African countries, which may want to add tributary lines off the main truck transmission network.

Given the scale of the project and the transmission distances involved, the funding challenges are likely to be significant, but Martins insists that the commitment to seeing the project through is higher than ever before. South Africa has set aside a substantial amount for the project in its 2013 Budget.

However, close energy-market observers believe it will still be some time before the project is realised, partly owing to the challenges associated with having multiple countries involved.

Another key consideration is the currency risk for a utility such as Eskom, which will have to deal with the likelihood of having to finance a dollar-based project and tariffs through rand-based revenues.

After the failure of a first attempt in 2010, DRC President Joseph Kabila hopes that this time the deal will be successful, as South Africa and the DRC signed a treaty in October on the Inga hydropower project, which could eventually become the largest hydroelectric project in the world, with the potential to power half of the continent.

Olu-Adeyanju highlights that the construction of power plants and other infrastructure projects, as well as companies’ readiness to commit to power infrastructure projects, seems to progress quicker in Zambia than in the DRC, with Zambia also having the upper hand in rail infrastructure.

The long-awaited refurbishment of the Benguela railway is nearing completion. “Work on the 1 344 km line between the Atlantic Port of Lobito, in Angola, and the town of Luau, on the border of Zambia, is scheduled for completion by the end of 2013. “The $1.9-billion project to refurbish the line has been financed through loans from China. “A branch line inside Zambia, due for completion this month, should offer copper producers in Zambia and the DRC an alternative route to import supplies and export production,” he explains.

He adds that Luau is about 850 km from Chingola, in Zambia’s Copperbelt province, and that copper producers in the region have long been hampered by logistics issues, with the two main export/import routes available to them being by rail through Tanzania to the congested Port of Dar es Salaam – a distance of about 2 400 km – or by road through South Africa to Durban – a distance of about 3 500km.

As a result of these infrastructure projects taking place in Zambia and the DRC, Olu-Adeyanju concludes, copper production will increase in the future, which will result in the Copperbelt becoming a leading copper producer worldwide.