Member Info for CF73

Moz needs/ aims to generate new power to connect 10million households by 2024 (not to mention supplying Malawi, SAPP and domestic industiries). With the nearby Cahora Bassa Dam having to export 82% of its power to South Africa (is written into the contract, from when approved and built), means Moz needs other large energy projects to come on line and pronto.

Also, looking at the recent news articles, is fairly clear that China will want the high quality coal at Tete. Can see that being used within Moz and exported.

A trusted LTH reported back comms he had with the MOMA project chap, saying that they needed/ wanted Substation Contract Award wrapped up by October 15th (we since hear that the Award was made October 6th and is just awaiting final approval)

Was this to ensure the MOMA Interconnection Project (Line and Substation) could be discussed with a reasonable degree of certainty, allowing meaningful regional trade conversations in Cape Town at African Energy Week (AEW) 2021?

Makes sense to me.

What stands out to me, is that the MIREME boss is not shy about the Coal and is pushing hard to use Moz resources (conventional and renewable) to secure investment and to generate economic growth.

Also worth mentioning, the nearby Cahora Bassa Dam – which I thought might be competition – has to, by law, export 82% of the electricity it produces to South Africa. Noncdezi is needed to support domestic needs (Moz President’s plans to connect 10million households by 2024: connection to population stands at ony 30% at the moment, while Moz GNI per capita stands at c.$1250, compared to less-resource-rich Malawi, at c.$1500) as well as meet export opportunities (i.e. Malawi/ SAPP)

We will we get news ahead of this November African Energy event?!

Very possible. Gives Moz concrete programmes and projects for energy trade/ exchange to put on the table.

"Mozambique's Minister of Mineral Resources and Energy to Lead the Mozambican Energy Industry to African Energy Week in Cape Town"

https://www.africanews.com/2021/09/20/mozambique-s-minister-of-mineral-resources-and-energy-to-lead-the-mozambican-energy-industry-to-african-energy-week-in-cape-town/

[...]

"Mozambique rapidly emerged as a competitive investment destination, with its significant energy reserves, prime geographical and demand placement, and market-driven approach to energy sector development. With over 100 trillion cubic feet of natural gas reserves, the largest untapped coal reserves worldwide, and one of the largest hydroelectric facilities in Africa, the country has positioned itself as both a hydrocarbon and renewable energy leader. Despite development delays caused by the COVID-19 pandemic and political insurgency in the northern province of the country, H.E. Minister Max Tonela’s is committed to accelerating energy sector growth through ensured operational security, public-private sector collaboration, and regional support."

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Article posted previously but relevant, pointing to upcoming energy events.

Should've said, last two paragraphs are my own.

Have to say, encouraged by the two recent articles, so thought I would post again:

1. ‘Coal power plant plans remain in five countries’ energy mix’ -- Oct 13, 2021
https://www.esi-africa.com/industry-sectors/generation/coal-power-plant-plans-remain-in-five-countries-energy-mix/

‘Botswana, Malawi, Mozambique, South Africa and Zimbabwe are forging ahead with their coal power plant plans despite the global ‘no new coal’ agenda. These five African countries are part of a group of 21 countries that have more than one new coal power plant at the planning stage.’

2. ‘Mozambique inks deal to complete Mozambique-Malawi Interconnection Project’ -- Aug 15, 2021
https://constructionreviewonline.com/news/mozambique-inks-deal-to-complete-mozambique-malawi-interconnection-project/

‘Mozambique is rich in conventional and renewable sources of energy and presents itself as a regional energy hub, so the interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable,” said Mozambique’s Minister of Mineral Resources and Energy, Max Tonela.’

If use the stories together, we can see Moz remains positive on coal and have agreed to NCCL going ahead with and implementing integration plans (at 9km away point to Interconnector Line), which would bring our Tete coal power on line, making it available domesticlly and especially for international trade.

Confirmatio of Intergation cost-savings in turn help to confirm the tariff, with Substation news not far off, perhaps the final piece of the jigsaw before tariff can be nailed.

https://www.esi-africa.com/industry-sectors/generation/coal-power-plant-plans-remain-in-five-countries-energy-mix/

[...]

Botswana, Malawi, Mozambique, South Africa and Zimbabwe are forging ahead with their coal power plant plans despite the global ‘no new coal’ agenda. These five African countries are part of a group of 21 countries that have more than one new coal power plant at the planning stage.

[...]

And particularly:

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“Mozambique is rich in conventional and renewable sources of energy and presents itself as a regional energy hub, so the interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable,” said Mozambique’s Minister of Mineral Resources and Energy, Max Tonela.

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That part is spelling out how important the Interconnector Infrastructure is to our project and to others like it. It creates additional markets, enabling wider regional development (incl. energy/ power sharing through SAPP) and is why World Bank is overseeing the funding and award of contracts.

So, seems it could be a case of substation contract award confirms infrastructure is happening, which in turn means cost-savings (via Integration at 9km-away point with Line from our project becomes a realisable), with subsequent tariff calcs, allowing then for final agreement on the tariff.

Really useful that this fairly recent article talks about the Line making these ‘large energy projects’ viable (both conventional and renewable – and must therefore be referring to us) - which looks to be the case.

https://constructionreviewonline.com/news/mozambique-inks-deal-to-complete-mozambique-malawi-interconnection-project/

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[...]

Mozambique-Malawi Interconnection Project

Mozambique’s share of the credit is US $45m and involves the installation of a 135km, 220KV power line while on the Malawi side, about 75 km of 220 kilovolt transmission line will be built and a new 220KV substation installed at Phombeya.

The project will also connect Malawi to the Southern African Power Pool (SAPP) for the first time, allowing two-way energy trade between the two countries. This will ensure a much needed diversification in Malawi’s electricity supply and allow the export of any off-peak power surpluses and also provide Mozambique’s energy sector with a new revenue source. The SAPP oversees electricity trade among member countries in southern Africa

“Mozambique is rich in conventional and renewable sources of energy and presents itself as a regional energy hub, so the interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable,” said Mozambique’s Minister of Mineral Resources and Energy, Max Tonela.

“Malawi will thus be able to participate equally with all other Member States in regional electricity trade, including importation and exportation to the regional market. In fact, it is another important step towards regional integration in the context of the Southern African Development Community,” he added.

China will continue to fund coal. They have a shortfall themselves.

There are some clues. The recent September RNS had the CMEC stating:

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"Following the recent positive progress with all parties, CMEC is pleased to have signed the power plant EPC contract as committed this quarter. This is an important milestone for the Project and CMEC is committed to working with Ncondezi to deliver the Project in the near future."

https://www.investegate.co.uk/ncondezi-energy-ltd--nccl-/rns/power-plant-epc-contract-signed/202109090700021851L/
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Many of us wondering, how could they say 'near future' if not reasonably confident of it being in the near future?! (Not to mention, how 'near' is this 'future'?!)

Well may be if that substation contract award was the key catalyst for confirming the tariff, and knowing when it was due soon, and they had covered most of the ground with the other milestones in the meantime?!

Things could move very quickly very soon.

Had been thinking that perhaps the award of the Substation contract to CMEC was all critical (CMEC have bid and is more competitive than their bid to build the Interconnector Line). However, as other LTHs have since stressed, the contract going to CMEC is less important than the award itself confirming the infrastructure is being built, therefore providing a concrete basis for NCCLs integration soluton, with its material relevance for the eventual tariff calcs. In other words, when the Substation award happens, theoretically, they can confirm the tariff.

We have been informed by reliable LTHs (who have learned directly from EDM) that the Matambo substation contract award is to be done by no later than 15th Oct. Specifically, when the contract for substation is awarded, it completes all the contract award processes for the construction of infrastructure supporting our project.

One LTH commented (and I hope they don't mind me posting this here):

"...the optimised transmission integration solution is a plan for a significantly shorter line from the Ncondezi Project site to link directly with the Moz/Mal transmission line rather than linking to the Matambo substation which is around 65km away. The Moz/Mal transmission line passes within 9km of the site of the Ncondezi project."

Another LTH pointed to an earlier RNS where NCCL explain that Moz authorities have confirmed that NCCL '...had been given the green light to incorporate the solution identified in the existing transmission integration study into their plans and associated tariff calculations. If that seems right, that seems very positive..."

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I think many - including me - hadn't seen the significance of this. It explains why tariff has not been confirmed. The (eventual) tariff will depend on the various parameters being able to be confirmed to seem degree of confidence. The cost savings to support final tariff cannot be confirmed with any reliable degree of confidence as that involves integration with the Interconnector Line at c.9KM away, as opposed to the Matambo Substation 65KM away (BIG difference in costs and subsequent impact on margins/ overall NPV projections and tariff).

In order to confirm tariff and enable the next set of critical milestones, there needs to be an acceptable minimal level of confidence that a) the project is viable; and b) the cost savings supporting an affordable/ competitive tariff can be reliably derived by this stage. With both, but especially b), as soon as the Substation construction contract is awarded by the World Bank (the Interconnector Line has been awarded already, for both Mozambique and Malawi sides of the Line), it confirms that the infrastructure is happening and that the integration solution, supporting cost-savings and tariff, can now be confirmed, meaning the tariff can now be confirmed, meaning all other subsequent milestones can be achieved in quick order (they've had enough time!).

This is I think a few of us believe we are now at.

Feel we are headed towards some BIG news.

Thanks to fellow LTHs and DYOR.

It does look extremely difficult, looking at the SP. However, it was only weeks ago that the EPC was signed, with CMEC saying "...CMEC is committed to working with Ncondezi to deliver the Project in the near future."

https://www.investegate.co.uk/ncondezi-energy-ltd--nccl-/rns/power-plant-epc-contract-signed/202109090700021851L/

Between then and now, there was Presidents Xi's comments about withdrawing financing coal. However, those were always short on detail, something commented on by most news articles carrying the story (including those as part of the anti-coal lobby). As an advanced project, we are safe (confirmed, imo, by teh EPC).

The SP has droppped because the inability of the company to provide any news as to where the situation is, particulary with the tariff. I would say, as I have at ther times, why would be the Wolrd Bank be building infrastructure for a new power source in Tete if this/ NCCL's project was not going ahead?!

The Interconnector line award, for hte Moz and Malawi sides of the line have been awarded by the World Bank. Now we just wait for the substation (at Matambo) comtract award where CMEC are one of the bidders.

That's really interesting. I checked on Malawi too (where some of our power will be going). Their GNI at 202 was $1, 540.

So is interesting that Moz/ we are selling to Malawi when Mozambique is at $1, 250 and still needs to connect 10million households to electricity by 2024.

Clearly a) Moz needs electricity for growth; b) Malawi needs electricity for growth; c) they need to generate more power, d) that development regionally (i.e. across the southern African nations via SAPP) is part of the bigger plan (including/ involving international support); and that e) the only way they will do this is to use high quality coal-fired/ derived power (particularly drawing on Moz, which is resource-rich).

...which includes usual interim stuff.

Hanno should now be freer to get on with those other milestones and related updates in Q4. Remembering CMECs comments about delivering the project 'in the near future'...

Hopefully, should be closing in 2021 -- is how I would intepret 'near future'

I hear you extrader. But I suspect that nations such as Mozambique want develpoment opportunities that Western nations/ societies have long enjoyed and won't be dictated to by wider global shifts in terms of coal etc.

Have said before, I know there is some desire to keep this under radar. But if the Moz people want it, and China are prepared to fund it (Xi's comments the other day were basically PR), what Glasgow COP says will be less material.

The only way to get move beyond use of coal globally, is to enable those respective developing world nations to develop, so they can move swiftly past coal use.

Take look at this segment:

"With Africa’s premier energy event taking place on the 9th-12th of November 2021, Mozambique is committed to promoting its resources, securing further investment, and accelerating regional economic growth, and will join the east-African producers in Cape Town at African Energy Week (AEW) 2021."

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And:
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"Mozambique has all the ingredients to become a regional energy producer and distributor, with major pipeline and power projects enabling the transportation of critical natural gas and electricity to neighboring countries such as Zimbabwe, South Africa, and Zambia. "

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And:
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"H.E. Ernesto Max Elias Tonela, Mozambique Minister of Mineral Resources and Energy (MIREME), will led the Mozambican industry delegation to Cape Town, promoting the role of the state-owned Empresa Nacional de Hidrocarbonetos (ENH), as well the country’s significant projects, abundant investment opportunities, and strategic position within the southern-African regional trade network."

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With the current infrastructure approvals taking place, once done (i.e. substation left), does that leave approval of our project ahead of the 'AEW 2021' - which is the Africa Energy Chamber’s (AEC) annual conference, exhibition and networking event', from 9th to the 12th November?!

So does that conference give us a timeline by which we will know?! As Moz El Presidente, Fillipe Nyusi, would be standing head and shoulders above all of the regional bosess, turning up with a number of Billion$$$ approved?!

Could well be! :-)

This is the Link:

https://www.africanews.com/2021/09/20/mozambique-s-minister-of-mineral-resources-and-energy-to-lead-the-mozambican-energy-industry-to-african-energy-week-in-cape-town/

Particularly:

"With over 100 trillion cubic feet of natural gas reserves, the largest untapped coal reserves worldwide..."

I don't think Moz will presenting blockages in terms of progressing the project. IMO, we haggling over the price right now.