17 September 2012

Mozambique: Plans for Ncondezi Power Station Advance

Maputo — The British-based Ncondezi coal company has published results of a "Power Definitive Feasibility Study" confirming the feasibility of installing a power station, capable of generating 1,800 megawatts of electricity, at the mouth of its coal mine in the western Mozambican province of Tete.

A 13 September release from Ncondezi says that the study, completed by Parsons Brinkerhoff, which is part of the British engineering group Balfour Beatty, and reviewed by the German electricity producer STEAG, shows that the proposed power station, consuming 7.2 million tonnes of coal a year, would be competitive with other sources of energy in southern Africa.

Ncondezi expects to build the power station in phases of 300 megawatt units, using the lower grade thermal coal that is not of export quality.

It is now seeking to enter into a partnership with a power plant developer and operator. Nkondezi says it has "already initiated a strategic partner search and the initial round of meetings with potential parties have been highly encouraging".

It expects the power station "to be financed through a typical Independent Power Plant (IPP) financing structure involving debt finance and joint venture partners, with limited equity financing from Ncondezi".

Its target is to commission the first 300 megawatt unit in 2017. This will connect to the Mozambican national electricity grid.

Ncondezi announced that it has received "the first necessary approval from the Mozambican Ministry of Energy". This, however, is only a preliminary step, laying down the timeframe "for conducting further studies which will be necessary in order for the power plant project to proceed along the path to full regulatory approval".

Commenting on the power definitive feasibility study, the Ncondezi Chief Executive Office, Nigel Walls, cited in the release, said the results "are very positive, confirming the viability of building a large mine mouth power station and adding significant value to the overall Ncondezi Mining Project with the addition of another revenue stream".

"Ncondezi's large thermal coal reserve is strategically located in an area that provides a competitive advantage in power in southern Africa, with existing and future infrastructure and established wheeling paths to meet strong domestic and regional power demand growth", added Walls.

The feasibility study selected Circulating Fluidised Bed (CFB) technology as "better suited to the quality and composition of the domestic grade coal". This form of combustion reduces the emission of nitrogen and sulphur oxides. Ncondezi claims this "will ensure compliance with the Mozambican Government's requirements for air quality as well as meet the World Bank's standards for emissions from coal-fired power plants".

Of the 300 megawatts produced in the first phase, 230 will be sold to the Mozambican electricity company, EDM, "at a competitive tariff". It will reach the national grid along a new 400 kv transmission line. The remaining 70 megawatts will be consumed by the mine and the power station itself.

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