Commercial production of coal in Kenya will start in the next two years.
This follows Chinese company Fenxi Mining’s announcement that it plans to invest hundreds of millions of dollars in the Mui Basin project.
Just two months after signing a concession accord with the Kenya government, Fenxi unveiled an exploration and production investment plan that should see mining start in 2016.
Dr George Kareithi, MD of Great Lakes, Fenxi Mining’s local partner, says the Chinese company intends to invest $500-million in the project, located some 180 km north-east of the capital, Nairobi.
“We have in place a comprehensive investment plan . . . [and] we intend to commence mining as soon as 2016.”
He adds that the company has already contracted Nortken International to carry out a strategic environmental assessment for the concession area.
In December last year, the Kenya government signed a concession accord with Fenxi Mining to develop two blocks in the concession area, estimated to host more than 400-million tons of coal reserves valued at $40-billion.
Fenxi will pay the East African nation a concession fee of $3-million for one of the blocks and $500 000 for the other.
When mining operations start, government will receive 23.6% of the gross revenue from the bigger block and 22.1% of the revenue from the smaller block.
Fenxi Mining won the concession for the two blocks in 2011 but the project has encountered opposition, particularly from the local community.
The resolution of the disputes, which culminated in the signing of the concession agreement, is a boost to Kenya’s efforts to generate electricity from coal.
Kenya is banking on coal-powered plants to generate at least 5 000 MW by 2017 to meet growing electricity demand, after it became apparent that geothermal plants would not come on stream soon enough owing to financial constraints.
Kenya is looking for private investors to build two coal- powered plants with capacity to generate 1 000 MW each.