Name and Location
Ncondezi coal-to-power project, Tete, Mozambique.

Client
Ncondezi Power Company (NPC).

Project Description
The 38 700 ha Ncondezi licence area is located in the coal-bearing Tete province, one of the largest undeveloped coal mining regions in the world.

The Joint Ore Reserves Committee-compliant coal resource amounts to 4.7-billion tons, permitting a large and long operation. The Phase 1 power plant will use Mozambique’s present transmission network, reinforced, to carry its output to consumers. Only about 20% of the country is currently electrified and the acceleration and expansion of electrification have become government policy.

The Ncondezi mine forms part of the integrated thermal coal mine and power plant project near Tete. The power station is expected to initially produce 300 MW, of which 60 MW will be used to operate the power plant and 240 MW will be supplied to the northern electricity grid of Mozambique for use by consumers across Tete province.

Being built in phases, the power plant project has been designed to be scalable up to a planned maximum capacity of 1 800 MW.

The Ncondezi mine will be will be the base for the project and the power plant will be located on the mining concession. The mine will be able to supply 1.1-million tons of coal a year, with an energy-producing capacity of 18.66 MJ/kg for 25 years.

The openpit mine will be 2 km away from the power plant and will have a lifetime capacity of 4.8-billion tons of coal. The coal from the mine – still at a lower quality than export-grade thermal coal – will have to be processed to achieve the desired grade of 18.66 MJ/kg before it can be used by the Ncondezi power plant.

Ncondezi Energy will consider exporting coal when the price of seabourne coal and access to rail and port infrastructure improve in the future.

Further, some of the other lower-quality coal from surrounding mines in Tete might also be used to bolster the power station’s coal supply.

Jobs Expected to be Created
During the construction of the Ncondezi power plant and mine, an estimated 2 000 jobs will be created. Once construction of the mine is completed, it will provide 50 permanent jobs, while the power plant will provide more than 200 permanent positions

Net Present Value/Internal Rate of Return
Not stated.

Value
The estimated cost of the power plant is $1-billion and that of the mine between $60-million and $80-million.

Duration
The mine and power plant will start construction simultaneously, with the power plant estimated to take three years to complete and the coal mine two years. Once the mine starts operations, it will accumulate a stockpile of coal for the power station to use once it has been completed.

Latest Developments
Construction of the NPC coal-fired power plant and the Ncondezi coal mine is expected to start in the second half of 2017, once power developer Ncondezi Energy has finalised an engineering, procurement and construction contractor, and financing.

The tenders for contractors that could construct the mine and the power plant were run separately, and started in 2014 and 2013 respectively. However, owing to changes in the boiler technology of the power plant, the tender processes will need to be updated, with bids scheduled for the fourth quarter of 2016 and contractors signed to start construction on the mine and power station during the second half of 2017.

In January, Mining Weekly reported that the Aim-listed company had entered into a binding joint development agreement with China’s Shanghai Electric Power Company (SEP) to develop the Ncondezi thermal power station project. The deal will result in SEP’s becoming a strategic investor in the Mozambique project.

As a result of the agreement, SEP will own 60% of NPC in return for a $25.5-million investment in the development of the project up to the point of financial close (when first funding drawdowns and construction begin). SEP will be responsible for 60% of the equity and all the debt at financial close of the project, while Ncondezi will be responsible for funding 40% of its equity.

Meanwhile, the Mozambique government has approved the mining operation and power station land use, and environmental and social plans.

Key Contracts and Suppliers
KPMG (mine feasibility study), Impacto and Environmental Resources Management Southern Africa (environmental- and social-impact assessment) and the Mineral Corporation (geological consultant).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
NPC corporate development manager Hanno Pengilly, tel +44 20 7183 5402 or email info@ncondezicoal.com.