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Ncondezi Coal announces results of studies on Ncondezi project

World Coal,

Ncondezi Coal Co. Ltd, a coal exploration and development company with coal assets in the Tete Province in Mozambique, has announced the results of the company’s Phase I studies on the Ncondezi project (licences 804L & 805L) for potential coal feedstock for local power generation and coal gasification.

Ncondezi project initial resource update

Coal deposits in Mozambique require washing to produce prime (i.e. export) coal products. This process results in large quantities of middlings coal byproducts with calorific values ranging between 17 – 20 Mj/kg, which are not suitable for export. This is expected to be the case at the Ncondezi project, which currently the subject of a Definitive Feasibility Study (DFS).

As mentioned in recent announcements, DFS drilling has identified quantities of low volatile coals at the Ncondezi project, predominantly in the South Block. Identification of potential markets for these low volatile coals is continuing; however the company is assessing its potential in export and local downstream markets. This comes at a time when the international seaborne coal export market has seen a strong emergence of lower grade or “off-spec” coals exported during 2011 as modern boilers (built post-2000 mainly in the growing economies of Asia) burn a broader spectrum of coals and coal buyers take advantage of blending techniques to lower average input costs.

A scoping study completed on the Ncondezi project in April 2010 was based on a single export thermal coal product and did not take into account potential revenues from middlings and low volatile coals. Recognising the potential use and application of these coals locally in Mozambique, the company appointed HB&A in the H2 2010 to conduct two Phase I studies to identify suitable technologies for the use of the company’s middling and low volatile coal products for local power generation and coal gasification.

Using low CV, low volatile coal samples (17Mj/kg, 7-10% vols) as a reference specification for both middlings and low volatile coals from the Ncondezi project, the studies assessed the suitability of these coals with a number of proven power generation and gasification technologies. The results of the two studies demonstrated the suitability and potential economic viability of generating power and producing syngas from these coals.

Further updates on power generation and gasification applications are expected to be announced in H1 2012.

An announcement regarding resource upgrade for both high and low volatile coals following review of the results of the recent DFS drilling programme by the Company’s consultants, The Mineral Corporation Consultancy (Pty) Ltd, is expected in the next two weeks.

Power generation

For power generation, the circulating fluidised bed (CFB) boiler technology has been identified as the preferred technology. CFB boiler technology is a proven technology with a number of advantages over conventional boilers, including:

  • Being able to burn coals with a wide-range of properties and can cope with high ash (around 50%) and high sulfur coals (2 – 3%).
  • Produce less sulfur oxide and sulfur dioxide emissions as sufur from the coal is removed by the addition of limestone, which acts as a sorbent. The sulfur becomes bound to the limestone enabling its removal and disposal.
  • The lower combustion temperatures of CFB boilers result in lower emissions of nitrogen oxide.
  • CFB reduces the environmental impact of discard coal dumps.

CFB boiler technologies have also been selected as the preferred boiler technologies for Rio Tinto’s +500 MW Benga power plant project in the Tete province, Mozambique, and Anglo American’s 450 MW Khanyisa power project in South Africa.

A mine mouth power plant has good potential in a region that suffers from a power shortage. The Tete province currently has 800 MW of existing transmission evacuation capacity via existing transmission networks through to South Africa and Zimbabwe, and a recently announced north-south backbone transmission network (the CESUL Project) is planned to provide additional evacuate capacity.

The company is now in the process of commissioning a (Phase II) PFS study on a power project that would use Ncondezi middlings and low volatile coals as a feedstock. The PFS study is targeted for completion in H1 2012

Coal gasification

For coal gasification, the Phase I study identified two potential gasifier technologies suitable for Ncondezi Project middlings and low volatile coals in the production of syngas: dry ash fixed bed gasifier and transport gasifier. Following the results of this study, at least two technology suppliers have expressed interest in undertaking additional “burn” tests of the Ncondezi middlings and low volatile coals to further validate their acceptability in gasifiers.

The company is now in the process of supplying coal samples for the burn tests and the results will allow the suppliers to confirm suitability and provide process guarantees. This follows similar work being conducted by Vale S.A. at their Moatize coal project, which is also in the Tete province.

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