By: Keith Campbell
29th June 2012
Mining Weekly
British junior miner Ncondezi Coal has confirmed that it plans to start production from its Ncondezi coal project, in Mozambique, in 2015, and to start construction of a coal-fired power plant, adjacent to the mine, in the same year.
Ncondezi is listed on the London Stock Exchange Aim. The project is located in the coal-rich province of Tete, close to Vale’s Moatize and Rio Tinto’s Benga operations.
The definitive feasibility studies (DFSes) for both the mine and the power station are nearly finished, the company reported last week. The mine DFS is on schedule for delivery to Ncondezi in the next (third) quarter and for publication in the fourth quarter, while the power station DFS is set for completion and publication during the third quarter.
The intent of the company is to produce coal for both export and to feed the power plant.
The coal used as power plant feedstock will not be of export grade. The electricity generated will be fed into the existing Mozambique power grid, with the country’s demand for electricity rising, and could even be sold to South Africa.
The Ncondezi deposit has a defined Joint Ore Reserves Committee-compliant resource of 4.7-billion tons of thermal coal. The mine will be developed in phases, with phase one having an annual production capacity of four-million tons, half of which will be for export, while the other half will be feedstock for the power station. Phase two will increase output to 12-million tons per year (Mtpy), of which 5 Mtpy will be for export and 7 Mtpy to feed the power station. This latter phase will be dependent on financing and infrastructural development in Mozambique. Ncondezi will be an openpit operation and the company believes that the deposit can sustain a long-life mine at a production rate of more than 10 Mtpy.
The power station will also be built in phases. Phase one, to be completed in 2017, will see the construction of a 300 MW to 600-MW-capacity power plant. Phase two will expand this capacity to 1 800 MW.
“We are focused on a phased development approach for the project in order to deliver a financeable solution which maximises returns and offers an achievable path to production,” said company CEO Nigel Walls at the release of the project update last week. “The power component of the project DFS will enhance overall project economics by providing revenue from nonexport-grade products at a minimal additional cost.
“Ncondezi is also well placed to capitalise on the significant potential for power generation in Southern Africa,” he added. “Our power strategy is closely aligned with the Mozambique government’s stated policy of in-country beneficiation, as it consolidates its position as a leading regional power player.”
The export coal will be targeted at markets in Asia, particularly China and India. Over the past two years, these two countries have become increasingly important thermal coal importers. “The long-term fundamentals for the seaborne thermal coal market remain strong as demand growth is driven by the build- out of power generation in Africa,” he highlighted. “[We] have a saleable product that is attractive to Asian customers.”
In terms of getting the coal from Ncondezi to the coast for export, the company will be able to make use of the upgraded Sena railway line to Beira, which is planned to have a capacity of 20 Mtpy by 2017, and the new (Vale-owned) railway link across Malawi to link up with the (also Vale-owned) Mozambique line to Nacala (which will be upgraded). The Malawi–Nacala line will have a capacity of between 18 Mtpy and 30 Mtpy and will start shipping coal in 2015.
Edited by: Martin Zhuwakinyu
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