Aim-listed Ncondezi Coal is not experiencing the infrastructure challenges of mining major Rio Tinto subsidiary Rio Tinto Coal Mozambique (RTCM), says Ncondezi Coal CEO Nigel Walls. These challenges contributed to the major’s announcement last month that its CEO, Tom Albanese, would step down after the company had reported a $14-billion impairment for 2012.
The development of infrastructure in Mozambique to support the country’s coal assets was more challenging than RTCM had initially expected and these constraints, combined with recov- erable coking coal volumes on the RTCM tenements, had led not only to the reassessment of the overall scale and ramp-up schedule of RTCM but also to the impairment that had been announced, Rio Tinto said in a media release last month.
About $3-billion of the $14-billion impairment pertains to RTCM and news agency Reuters reported towards the end of last month that Rio Tinto had begun a review of its Mozambique coal mining operations, while reconsidering development plans, partners and options for getting the coal from pit to port.
“However, Ncondezi flagged potential problems in terms of infrastructure internally last year, hence the decision to focus on developing our power strategy with the development of a 300 MW integrated power plant and mine, as opposed to simply being an export coal project,” Walls tells Mining Weekly.
In December, Mining Weekly reported that Ncondezi’s 300 MW project had unique advantages over other potential power projects in the region, as it was solely dedicated to meeting Mozambican demand.
“It is scalable in 300 MW units to ultimately 1 800 MW, it is close to existing transmission infrastructure with available capacity and, perhaps most importantly, it is not dependent on the development of rail and port infrastructure projects,” Ncondezi said in December.
Meanwhile, Walls states that Ncondezi is not affected by Rio Tinto’s announcement.
“For us, it is business as usual. We are concentrating on providing power, which is of great importance to the Mozambique government. We have been reassured, since Rio Tinto’s announcement, by the Mozambique government, the Ministry of Energy and power utility EDM that they still support our project,” he says.
The Mozambique government is showing the willingness and desire to get this project up and running, as increasing electrification will allow the country to continue on its path of economic growth, he adds.
Further, Ncondezi also does not foresee problems with regard to securing financing for the project.
“We are still, despite Rio Tinto’s announcement, receiving a lot of interest in the project, as people understand that power is in short supply in Mozambique and Southern Africa and, hence, it would be beneficial to be involved with a potential large-scale energy producer,” says Walls.
The cost of the Ncondezi integrated power and mine project is estimated at between $500-million and $600-million. Construction is planned to start in 2014, with the power plant generating electricity by 2017.