Mozambique’s Ministry of Energy and joint venture (JV) Clean Carbon Industries (CCI) will complete and submit the second phase of the prefeasibility study (PFS) to government for the development of a 65 000 bl/d coal-to-liquids (CTL) plant in Mozambique’s Tete province this month.

The second phase of the PFS for the $9.5-billion plant started in December 2011 and includes testing the suitability of waste coals and developing concept technology designs and project configuration.

To date, results of the PFS indicate that the low-grade coal mined from Tete can be economically gasified, the project is economically viable within certain capital cost limits and 66% of the product stream can be exported as a clean synthetic fuel (synfuel) to an existing market in Europe.

CCI, a JV between venture capital firm Twin City Venture Capital, consulting firm Hugh Brown & Associates, local Mozambique shareholders and a team of international engineering specialists, says the remaining 33% of the planned product stream will be reserved for Mozambique, which has first option in product offtake.

By producing fuel in Mozambique, the CTL project will save the country millions in foreign exchange currently spent on importing transportation fuels.

Using the cleaner fuel produced by the plant enables the use of higher-grade diesel engines in mining equipment fleets in Tete. This, in turn, leads to better fuel efficiency and lower maintenance costs for miners and for rail transport to the coast, which will result in industrywide cost advantages.

The first phase of the PFS, which was started in March 2011 and was completed in October that year, has already been submitted to Mozambique’s Energy Minister, Dr Salvador Numburete, and his team in Maputo, says CCI.

Meanwhile, the feasibility study, which will start in March 2013 and is expected to take about two years, will further focus on capital and operating cost estimates and engineering and final execution costs, as well as the existing and growing export and internal markets for clean synfuels, says CCI technical director Koos Smit.

Initial work yet to be conducted in the feasibility phase is an environmental-impact assess- ment on water use, reaching zero-effluent status, and carbon dioxide (CO2) sequestration.

All the major environmental concerns will be addressed in the design of the plant and not after its construction, says CCI CEO and Hugh Brown & Associates chairperson Hugh Brown.

“The plant will include technologies to ensure it pro- duces zero effluent, is carbon- sequestration ready and recycles all process water.”

The multibillion-dollar plant, which CCI says will be the largest private investment in Mozambique to date, includes all project elements, including logistics and social development.

The project’s funding model includes government assisted and commercial debt, driven by offtake and numerous Exim Bank guarantees, as well as equity provided by the JV partners.

However, the final capital and operational costs, based on the type of coal to be used and the technologies investigated and selected, are yet to be determined.

The JV aims to start construction of the plant during the first quarter of 2016 and first production is planned for 2019.

The Mozambique government has first call on the first 20 000 bbl/d produced by the plant. The remaining 45 000 bbl/d of clean synfuel will be exported to Tanzania, Malawi, Zambia and Botswana; however, the largest part of the export fraction will be exported to an undisclosed customer in Europe who has signed a preliminary agreement with CCI for an undisclosed amount of clean synfuel for blending with existing fuels.

Mozambique Coal
Mining Weekly reported in June that about 36 mining companies were currently active in Mozambique’s Tete province, with activities being dominated by Australian diversified miner Rio Tinto and Brazilian mining company Vale.

The Zambeze coal basin, which underlies Tete, is believed to hold about 23-billion tons of coal, Mining Weekly reported last year.

The Moatize subbasin’s reserves are estimated at 750- million tons, and the Muchana-Vusi subbasin is said to contain as much as 3 600-million tons in coal reserves.

Smit says the low-grade, nonexportable and nonsaleable waste coal produced in Tete is suitable for gasification, as validated by independent testing done by coal miner Ncondezi Coal.

“Owing to the high ash content of the coal and [the absence of an] international market for this type of coal – known as a washed middling – it cannot be exported and has to be beneficiated in Tete if it is to be used at all.

“If it is not used in Tete, it must be stockpiled as waste, which could lead to an environmental problem,” he says.

Having coal dumps in the country results in issues such as spontaneous combustion and smoke, as well as the possibility of the sulphur leaching out into the water systems.

As coal mining in Mozambique is for export, the country receives little value from it. By converting the coal into fuel, the country receives multiple benefits, such as fuel security, secure fuel prices, clean fuels, a positive contribution to the balance of payments, environmental sequestration of waste coals and the creation of value-added jobs.

CCI estimates that there are about four-billion tons of low-grade coal in Tete, with the existing mines expected to produce up to 30-million tons a year of low-grade or waste coal when the mines reach full production by 2020.

CCI expects that only 30% of its low-grade coal feedstock for the plant will be specially produced, as selective mining is not always possible.

CCI, under the name Warrior Coal, a JV with the Frelimo Veterans Organisation, has been awarded two coal concessions, which are being evaluated for suitability for gasification.

The remaining 70% of coal feedstock will be sourced from existing coal mining operations in Tete that produce low-grade coal as a by-product when mining for export coking and thermal coal.

This will increase the yields and cost effectiveness of current mining operations, even though the value of the waste coal is very low, says Smit.

Project Background
The project involves the engineering, procurement and construction of a 65 000 bl/d CTL facility in Tete province; the development of a pipeline from Tete to the coastal town of Savane, north of Beira, Mozambique; as well as a free-trade industrial zone and a single-point loading and mooring arrangement at Savane to ship the product.

CCI is evaluating two coal gasification technologies and the Fischer-Tropsch synthesis process used to produce the final synthetic products.

The Tete basin comprises extensive coking, thermal and low-grade coal resources and more than $4-billion has been invested by mining companies including Vale, Rio Tinto and Ncondezi Coal in the undertaking of exploration, development and construction, as well as the commissioning of new coal mines in the region.

Smit says the sheer scale of the project has been a challenge.

“The site plan estimates construction over an area of 1 km × 2 km. The largest component to be installed weighs about 2 000 t and the plant will require a construction team of about 12 000 people,” he says.

As a result, key to the project is establishing a team with extensive experience in CTL technology and major Mozambique-based mining and petrochemicals projects, he adds.

Meanwhile, the Mozambique government has committed significantly to the project by providing an integrated multisector working team, led by the country’s Ministry of Energy, which has proved to be key in the project’s speedy progress.