London-listed energy and mining company Edenville Energy (AIM:EDL) has recently published an update regarding the Rukwa Coal Project in southwest Tanzania, anticipating that it expects…
Tanzania’s coal reserves are estimated at 1.9 billion tonnes, 25% of which are proven. Tanzania’s coal production reached 712,136 tonnes in 2019, compared to 257,321 tonnes in 2015 (+177%).
The currently exploited coal is used for industrial applications. Tanzania’s industries use coal for thermal applications, particularly in cement factories and agro-processing industries, while coal briquettes for cooking are being promoted instead of charcoal which is the main source of fuel for cooking in the country.
Tanzania currently generates less than 1% of its total installed capacity of 1,602 MW from coal-fired power plants, which are fully supplied with imported coal.
Tanzania Coal Mines
Coal projects are located in south-western Tanzania and include the Ngaka coal mine, the Rukwa coalfields, and the Kiwira coal mine.
Ngaka Coal Mine
The Ngaka project is the largest operational coal mine in Tanzania and in East Africa. The coalfield is situated in the resource-rich western minerals province of Tanzania.
The Ngaka Basin comprises the Mbalawala sub-basin in the south and the Mbuyura-Mkapa sub-basin to the north. Total proven coal resources amount to 367 million tonnes.
The Ngaka Coal Project is operated by Tancoal Energy, which is a joint venture between the National Development Corporation of Tanzania (NDC) and Intra Energy Tanzania Limited (IETL), a 100% owned subsidiary of Intra Energy Corporation (ASX:IEC).
Tancoal commenced mining operations at Ngaka in 2011. In FY 2020, sales were 523,027 tonnes, compared to 788,702 tonnes in FY 2019 (-34%). The decrease in sales was due to the effect of Covid-19 on the business of both domestic and export customers and competition from small miners.
Accordingly, production also decreased by 34% in FY 2020 to 496,852 tonnes, compared with 748,874 tonnes in FY 2019.
The Ngaka Coal Project is expected to produce between 2-3 million tonnes of coal for export. At an estimated maximum production rate of 4-5 million tonnes per annum, the Ngaka Coal Project has sufficient proven coal resources for over 50 years of profitable, low-cost production.
Additionally, IEC has plans to invest in a 200 MW coal-fired power plant at Ngaka. In 2015, IEC signed a Memorandum of Understanding (MoU) with Sinohydro, a Chinese state-owned hydropower engineering and construction company, for a 200 MW coal plant at Ngaka.
Tancoal would provide coal for the power plant, estimated at 1.2 million tonnes per year at its mine located 7 km from the plant.
In 2017, talks recommenced with Sinohydro following a letter from the Minister of Energy and Minerals to move ahead on the Ngaka Power Station project. It was agreed to renew the MOU and establish a joint venture vehicle once equities are established.
However, the latest IEC update of April 2020 indicates that: “IEC continues to investigate partnership arrangements for the development of a mine-mouth power station, however, the Government [of Tanzania] has not given an approval for a coal-fired power station for southern Tanzania at this stage.”
Rukwa Coalfields Project
At the beginning of 2016, UK-based energy and mining company, Edenville Energy Plc (LSE:EDL) was granted a mining license by Tanzania’s Ministry of Energy and Minerals (MEM) to develop its Rukwa coalfields project in the country’s southwestern region.
The Rukwa coalfields comprise the Mkomolo, Namwele, and Muze deposits, hosting 173 million tonnes of measured and indicated coal, sufficient to support a 120 MW coal-fired power plant for 30 years.
In FY 2019, total production amounted to 37,239 tonnes, compared to 75,442 tonnes in FY 2018 (-51%). The decrease was partly due to lack of working capital to complete a planned mine upgrade.
The latest 2019 annual report of Edenville points out that the Company still plans to pursue the coal to power project.
However, in February 2019, the Tanzania Electric Supply Company (TANESCO) informed Edenville that the Company had been unsuccessful in moving through the Request for Qualification process to supply power to TANESCO.
Edenville notes: “The Company’s Directors remain confident that if and when the transmission line infrastructure is built to Sumbawanga, the opportunity for a power plant development at the Rukwa Coal Project will continue to move forward. Edenville is also seeking to advance discussions on smaller plant options to satisfy local electricity demand and possible export options into Zambia.”
Kiwira Coal Mine
The Kiwira Coal Mine is a stalled coal project within the Ivogo Ridge of the Songwe-Kiwira coalfield which is situated South-East of Mbeya City within Ileje District. The project is targeting to produce 1.5 million tonnes of coal per annum.
In 2019, Tanzanian President John Magufuli directed the transfer of all Kiwira shares still held by the initial investor, TanPower Resources, back to the government to pave the way for a fresh sale to potential new investors.
Tanzania Coal Potential
The 2015 National Energy Policy of Tanzania indicates that according to geological information the country’s coal reserves potential could be 5 billion tonnes.
Coalfields with the highest potential are Ketawaka-Mchuchuma in the Ruhuhu Basin, the Ngaka fields in the South-West of Tanzania, and the Songwe Kiwira fields.
Sources: African Development Bank (AfDB), Bank of Tanzania (BoT), Edenville Energy, State Mining Corporation (STAMICO), Tancoal Energy
Last Update: 2 October 2020
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