20 September 2013 – Ncondezi Coal Company Mozambique was granted a mining concession for its integrated coal mine and power station project. This gives the company exclusive rights to mine the Ncondezi coal deposit for 25 years. The concession is in Moatize district, in the western province of Tete, and covers 25,138 hectares.

The company plans to develop an integrated thermal coal mine and power plant in 300 MW phases up to 1,800 MW, and first production is planned for 2017. The first 300 MW phase is targeting domestic consumption in Mozambique, using existing transmission capacity to meet current demand.

Unlike the other mining companies operating in Tete, Ncondezi’s priority is not high quality coking coal for export. Instead it is concentrating on thermal coal for local power demand. Production of export thermal coal will be considered only when the required third-party rail and port infrastructure is in place.

The public Mozambican Mining Exploration company will be granted a 5% free carry in shares of Ncondezi until the start of the mine’s construction. Ncondezi is also obliged to set aside a statutory 5% equity participation for the Mozambican public at commercial market terms.

Ncondezi coal company CEO, Paul Venter, says, “The issuance of the mining concession marks a very important and significant step forward for the Ncondezi project. It secures the coal fuel supply for the power project, which materially increases the bankability of the Ncondezi project, and also fulfils one of the key conditions precedents to the Power Framework Agreement.”

The other conditions are agreements with the Mozambican electricity company, EDM, on purchasing the Ncondezi power, and on the construction of transmission lines. Venter says that these agreements “are in the final stages of negotiation and on track for signing by the fourth quarter of 2013.”