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

Location
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 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 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
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 plans to engage with new strategic partners who have expressed an interest in helping to develop its integrated thermal coal mine and 300 MW power plant in the country’s Tete province. This comes after the company suspended exclusive discussions with Shanghai Electric Power (SEP).

The miner has explained that its joint development agreement – which would have resulted in SEP’s injecting $25.5-million to fund the balance of the power project development costs to financial close in return for a 60% shareholding in the subsidiary Ncondezi Power Holding 2 – had been called off, owing to exclusivity arrangements with SEP having lapsed.

“The decision to suspend exclusive discussions follows more than three years of negotiations and work. The ongoing delays in funding are unsustainable and it is now in our best interests to suspend these discussions,” the company has said in a statement.

The company has, however, received indications of interest for an additional $350 000 shareholder loan, which is being finalised and documented, and will fund the company until September 2, when its existing shareholder loan becomes repayable.
Initial feedback on a new funding partner is expected before the end of August.

The company's senior management deferred 50% of their salary between November 2016 and January this year and have deferred 100% of their salary since February. The management team have agreed to convert their deferred salaries into the shareholder loan, with the total amount expected to be $232 000. It will not attract any returns.

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.