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.

Project Owner/s
Ncondezi Energy.

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 users. 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 users 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 seaborne coal and access to rail and port infrastructure improve in the future.

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, about 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.

Capital Expenditure
The estimated cost of the power plant is $1-billion and that of the mine between $60-million and $80-million.

Planned Start /End Date
Ncondezi aims to deliver the first power from the project in 2023.

Latest Developments
Ncondezi Energy has recorded key developments at the project following the formal submission of an updated power tariff on March 31.

After meetings with State-owned power utility Electricidade de Moçambique (EDM), additional work requirements have been agreed upon and an updated development programme has been submitted to EDM for approval.

An updated transmission integration study and a Mozambican power market outlook study have also been commissioned, and are targeted for completion in the third quarter of this year.

"With EDM's guidance, the company has agreed to update its transmission integration study, as well as conduct an independent market study for energy supply and demand forecasts in Mozambique and potential export markets. The results of these studies should verify certain technical assumptions and provide greater certainty around the business case for the project alongside the tariff proposal, facilitating negotiations on the project tariff. The results are also expected to be a key requirement from potential project lenders and investors,” Ncondezi CEO Hanno Pengilly has said.

Allowing for the completion of these independent studies, tariff agreement is now expected to be finalised in the second half of 2020.

The shareholders agreement term sheet is expected to be ready for signature in due course.

An international audit firm has been appointed by the project’s co-developer, China Machinery Engineering Corporation, to undertake the historical cost audit, which had started. Completion is targeted for the third quarter of this year.

Engineering, procurement and construction (EPC) contracts are also expected to be signed in the third quarter.

The independent studies are expected to add at least two months to the project development programme, moving the tariff agreement into the second half of 2020.

Based on this, the company has submitted an updated work programme to EDM for review.

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).

Contact Details for Project Information
Ncondezi Energy, tel +44 20 7183 5402 or email info@ncondezicoal.com.