Maputo — The London-based Ncondezi Coal Company has agreed with Mozambique's Ministry of Mineral Resources (MIREM) to complete feasibility studies on its coal mines in the western province of Tete within the next two years.

This is the one of the key conditions imposed by MIREM for granting a mining concession to Ncondezi Coal.

According to a press release issued by the ministry, the agreement was signed by Minister of Mineral Resources Esperanca Bias and David Eshmade of Ncondezi Coal.

Established in Mozambique in 2005, Ncondezi Coal was initially operating under the name Zambezi Energy Corporation Limited.

The company holds two exploration licenses in the area of Ncondezi, in Tete province, and is currently investing 60 million US dollars on prospecting and feasibility studies. It is also investing a further two million US dollars on social projects in local communities, under the terms of a memorandum of understanding signed last year with MIREM.

Ncondezi Coal plans to invest five billion US dollars on developing the mine and associated infrastructure. It has completed initial studies on the use of lower quality coal locally in power generation, and has commissioned a feasibility study on the development of a 3600 megawatt coal fired power station. It is also looking into coal gasification.

Production is expected to start by 2015, and to reach its peak in 2020 with the extraction of 10 million tonnes of coal per year. When it reaches full production the mine will employ about 500 Mozambican workers.

The company estimates that the concession holds up to 4.7 billion tonnes of coal. Of this, four billion tonnes of coal is less than 250 metres below the surface, making it available to open cast mining.