Ncondezi Energy has agreed to enter negotiations with China Machinery Engineering and General Electric South Africa to develop, construct and operate the integrated Ncondezi 300 MW coal fired power project and open pit coal mine in Tete, Mozambique.
Highlights of the non-binding agreement:
- China Machinery Engineering and General Electric South Africa are world leaders in the energy sector with significant experience in Africa and Mozambique
- Ncondezi agrees non-binding agreement with China Machinery Engineering and General Electric South Africa to acquire a minimum 60% equity stake in the integrated project
- Non-binding agreement grants exclusivity until 30 April 2018 to conclude a binding joint development agreement (JDA)
- JDA will set out the commercial terms on which the parties will complete the acquisition and jointly develop and fund the Integrated Project up to and including financial close (FC)
- China Machinery Engineering and General Electric South Africa to lead project debt financing in conjunction with Ncondezi for both the power project and mine project at FC
- China Machinery Engineering and General Electric South Africa will be responsible for the engineering, procurement and construction (EPC) and operations and maintenance (O&M) for the integrated project on a build own operate basis
- Power project boiler technology will return to circulating fluidised-bed (CFB) from pulverized coal (PC), where technical work is more advanced
- Offer subject to China Machinery Engineering and General Electric South Africa successfully completing their due diligence and agreeing the commercial terms of the JDA
- FC targeted for completion end Q4, 2018
- Formal signing ceremony for the non-binding agreement planned in Beijing, China in early November 2017
“Ncondezi Energy is pleased to announce agreeing to enter into exclusive negotiations with CMEC and GE, following an intensive process to identify a new partner to take a leadership role in delivering the 300 MW coal fired power project and integrated mine," states Ncondezi Energy non-executive chairman, Michael Haworth.
"The China Machinery Engineering and General Electric South Africa non-binding agreement has the potential to materially de-risk the development, financing, construction and operation of the power and mine projects.
"China Machinery Engineering and GE’s collective experience in both the energy and mining sectors and specific experience and reputations operating in Mozambique, gives them distinct advantages as a potential partner with Ncondezi Energy.
"The non-binding agreement proposes to develop the power plant and mine projects as an integrated project, which has the potential to greatly simplify the development, commercial and financing aspects of the process to FC and is welcomed by Ncondezi Energy.
"The board of Ncondezi Energy believes that a return to CFB technology, where technical work is more advanced, will also facilitate a shorter, more cost effective route to FC.
"This announcement further highlights the advanced development stage of the power project and its attractiveness to international developer and operators. All efforts will now be focused on delivering the JDA,” concludes Haworth.
Feature image credit: Eskom