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 received “in principle” support from all loan holders to enter into a loan restructuring for its existing $5.1-million loan and on the process to conclude a binding joint development agreement (JDA) for the company’s integrated 300 MW power and coal mine project.

Company chairperson Michael Haworth and nonexecutive directors Estevao Pale and Chris Schutte signed irrevocable commitments on August 29 to enter into the restructuring on terms agreed by the other lenders.

Restructuring documentation yet to be finalised is expected to be received by the end of September.

While there is currently no certainty regarding whether the restructuring will indeed occur, Ncondezi has said all lenders have indicated that they will not call in the loan while the restructuring is being finalised.

Amendments to the loan, which matures in September, include a 12-month extension and a 12% interest rate.

Additionally, the company and its potential strategic partners have held meetings, as planned, with the State-owned power utility Electricity de Mozambique (EDM) and the Ministry of Mineral Resources and Energy (Mireme).

EDM and Mireme have emphasised the need to align the project development timeline with the current regional market environment and planning, as well as the need for a support package to progress the project and the JDA.

These are currently under negotiation.

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.