Name of the Project
Ncondezi coal-to-power project.

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

Client
Ncondezi Power Company (NPC).

Project Description
Ncondezi's 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. 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 for use by consumers across Tete.

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 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 the surrounding mines in Tete might also be used to bolster the power station’s coal supply.

Potential Job Creation
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
Construction of the mine and power plant will start 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
Ncondezi Energy has submitted a final work programme and timetable for its Ncondezi integrated 300 MW power and coal mine project to a government-sanctioned liaison committee that is tasked with implementing the project.

“The updated work programme and timetable is the final part of a process, which targets having all relevant parties responsible for the project's delivery in agreement on the way forward.

“Once agreed, the company and its potential strategic partners can focus on the delivery of key milestones, such as the joint development agreement (JDA),” Ncondezi chairperson Michael Haworth has said.

The liaison committee comprises representatives from the Ministry of Mineral Resources and Energy and Mozambique State-owned power utility Electricity de Mozambique (EDM).

The timetable has been designed to fit with EDM's generation plan, which includes coal-fired power to be produced in the Tete region by 2023.

The proposed work programme and timetable target approval being received from all liaison committee members before year-end; however, the timing will depend on feedback from the liaison committee, and the review and agreement process.

Ncondezi expects to conclude the JDA and the signing of binding engineering, procurement and construction, and operations and maintenance contracts, in the first quarter of 2019.

This will be followed by the signing of a power purchase agreement and power concession agreement by the first quarter of 2020.

Ncondezi further expects to reach financial close for the project during the first half of 2020, with commercial operation at the project to start in the first half of 2023.

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.