Tanzania: Australian firm gets coal mining permit

Australia’s Intra Energy Corporation (IEC) planned to invest $236 million (R1.7 billion) in Tanzania’s first privately funded coal mine and a coal-fired power plant to reduce the nation’s reliance on hydropower, its chairman said yesterday.

IEC Executive Chairman Graeme Robertson said that mining was expected to begin in the coming week, with the first consignment of coal expected next month.

The mine was projected to expand its output to 500 000 tons a year by 2013 – with a long-term maximum output capacity of 5 million tons a year, he said.


IEC’s local unit in Tanzania, Tancoal Energy, had already spent $23m on exploration and initial development costs of the Mbalawala mine, in the southwest of Tanzania, Robertson said.

“This investment will increase by some $93m (in order) to increase the mining to a rate of up to 5 million tons a year.

“We are currently meeting compensation payments this week and will commence proper mining next week. The first shipments of coal will commence in September,” he added.

The IEC would invest an additional $120m in a 120 megawatt coal-fired power plant near the mine.

Robertson said that the company was also considering construction of a 400MW power plant in the southern Tanzanian town of Mbeya and another 400MW power station in Dar es Salaam, between 2013 and 2018.

Tanzania wants to spend $742m by 2012 for emergency power projects aimed at ending chronic energy shortages, and intends to switch to thermal power sources such as coal.

This would wean it off weather-dependent hydropower, which accounts for 55 percent of its electricity generation.

IEC owns 70 percent of the shares in Tancoal.

The first stage of the mine development targets initial production of 10 000 tons a month, rising to 30 000 tons a month in 2012 and stabilising at 500 000 tons annually from 2013.

“The initial markets are (local) industrial markets such as Mbeya Cement and Tanga Cement,” Robertson added.

“Our combustion engineers have found strong interest from factories wanting to generate their own electricity with coal-fired generation because of the unreliability or lack of availability of electricity.”

The Mbalawala mine is projected to substitute coal imports from South Africa and offset high costs associated with the Tanzanian shilling’s depreciation, which has lost 9.8 percent this year.

Tanzania imports 250 000 tons of coal a year from South Africa.

The Tanzanian mine has a mineable reserve of 40 million tons of coal.

“Our exports commence this year to Malawi and we believe it is our role to support neighbouring countries with exports to Kenya and possibly Mauritius,” Robertson said.