Coal prospects in Southern Africa and the work of the IEA Clean Coal Centre

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1 Coal prospects in Southern Africa and the work of the IEA Clean Coal Centre Geoff Morrison Programme Manager IEA Clean Coal Centre 2nd Conference on Zimbabwe s Energy Future 11 April 2014

2 Members of IEA Clean Coal Centre Austria Canada CEC Italy Germany Japan Poland Republic of Korea S Africa UK USA Australia Beijing Research Institute of Coal Chemistry Anglo American Thermal Coal Glencore Xstrata Electric Power Planning & Engineering Institute of China Banpu BHEL Coal Association NZ Suek

3 Some of the products and services offered by the Centre

4 International Workshops planned for 2014

5 Reports completed in the past 12 months (1) Prospects for coal and clean coal technologies in the Philippines Mar 2013 Recent developments in particulate control Mar 2013 Developments in CFBC April 2013 Coal and gas competition in global markets July 2013 Upgrading and efficiency improvement in coal-fired power plants Recent operating experience and improvement of commercial IGCC Aug 2013 Aug 2013 Combining renewable energy with coal Sep 2013 Quantifying emissions from spontaneous combustion Sep 2013 Challenges and opportunities for coal gasification in developing countries Oct 2013

6 Reports completed in the past 12 months (2) Techno-economic analysis of PC versus CFB combustion technology Oct 2013 Advances in multi-pollutant control Nov 2013 Status of advanced USC pulverised coal technology Dec 2013 Coal prospects in Botswana, Mozambique, Zambia, Zimbabwe and Namibia Dec 2013 Sustainability of biomass for cofiring Dec 2013 Management of waste products from coal utilisation Jan 2014 Developments in modelling & simulation of coal gasification Feb 2014 Coal reserves in a carbon constrained future Mar 2014

7 Reports in draft Non-fuel uses of coal Effects of climate change on coal-fired power plants High temperature steels in pulverised coal technology Coal sampling and analysis Coal prospects in Turkey Upgrading the efficiency of the world's coal fleet to reduce CO2 emissions

8 Reports in progress Coal prospects in Turkey Upgrading the efficiency of the world's coal fleet to reduce CO2 emissions Economics of drying technologies for low rank coal Blending of coals to meet power station requirements Recent development of oxy-combustion technologies R&D programmes for clean coal technologies Increasing the flexibility of future coal-fired power plants Regulatory and other challenges to coal use in the USA Increasing the flexibility of future coal-fired power plants Coal versus gas in Asia Climate implications of large-scale coal-to-gas substitution Biomass resource assessment for cofiring Coal beneficiation for the direct injection coal engine Performance improvements from advanced sensors and smart controls Outlook for environmental equipment under new mercury emission regulations

9 Coal prospects in Southern Africa

10 Primary energy in Mozambique, Botswana, Zimbabwe, and Zambia

11 Mozambique Population 24 m GDP US$15 billion Per capita GDP $600 GDP growth 7.5% Inflation 1.2% former Portuguese colony aluminium represents 50% of country s exports earnings; >90% foreign owned numerous port facilities capable of handling coal has potential to serve the entire Southern African region to date has almost no coal demand

12 Coal activities Expanding Maputo coal terminal Coal mining exploration and production: Vale (Brazil) Rio Tinto (UK) Talbot-Nippon Posco (Australia, Japan, Korea) Jindal Steel (India) Beacon Hill Resources (UK and SA)

13 Coal in Mozambique the Tete province Zambezi and Moatize coal basins Located in Tete region in the northwest sandwiched between Malawi, Zambia, and Zimbabwe Estimated reserve of 1 Gt, but could be much greater (>23 Gt, resource of 1000 Gt) 70% coking coal quality Seams can be 4m thick; Opencast mining Generally low-s coal but some high ash

14 Major coal operations in Tete 3 main operating mines Moatize (Vale) Benga (Rio Tinto) Minas de Moatize (Beacon Hill) Plans for 4 more Associated coal-fired power plant developments All spearheaded by a coal export business New rail and expanded port facilities

15 Mozambique coal region and inland routes to ports 13 Mt/y of port capacity Maputo (also known as Matola, 6 Mt/y rising to 25 Mt/y) Beira (6 Mt/y) Nacala (1 Mt/y rising to 18 Mt/y?) Tete to Beira: Sena link, mostly serving Vale and Rio (currently disrupted) Tete to Nacala: via Malawi or not?

16 Coal activities are partly driven by the need for domestic power Mozambique uses 13,000 GWh, and generates 17,000 GWh of almost all hydropower Net-exporter to SA And 45% of domestic generation supplies the Mozal aluminium smelter plant Yet grid supplies just 11% of households

17 Coal power for diversification Current capacity 16 GWe Largest hydro plant Cahora Bassa (Zambezi river) Still survives after the 15 yr civil war Demand growth 7%/y Coal-fired power associated with coal mine developments could add 1200 MW of new capacity Adding much needed power and 3 Mt/y of coal demand

18 Mozambique coal prospects The core business is coking coal for export, possibly 56 Mt/y by 2020, but current levels are 4-6 Mt/y New power projects will use either coal washery products or associated steam coal unlikely to dent the export contracts Some interest in coal-to-liquids and fluidised bed technology to deal with high ash washery products

19 Botswana Population 2 m (versus 24 m for Moz) GDP US$14 bn (versus US$15 bn for Mozambique) Exciting coal prospects but just as challenging as Mozambique Geographically landlocked Half the population live within 100km of the capital city Gaberone Kalahari desert covers much of the country Water resources are therefore scarce Drought is a major problem (no hydro power)

20 Diamond s are coal s best friend? Mining accounts for 35% of GDP Diamond industry accounts for 76% of export values enabled Botswana to avoid the worst effects of the global recession Diamond industry also spearheading more coal developments within Botswana

21 Coal activity in Botswana Coal activity is close to the SA border centred around Morupule, and developing in Sese (by AER) Potential resource of >200 Gt; economically recoverable reserves closer to 3-40 Gt Production <1 Mt/y at Morupule colliery (capacity 3 Mt/y), underground operation operated by Debswana Diamond Co 50% of production supplies 120 MWe Morupule-A power plant Seams 8 m thick using room and pillar with continuous miners Almost all coal is crushed and washed

22 Botswana coal markets Morupule A Botswana s only power station until 2012 Mine production capacity increased to 8 Mt/y to supply the new Morupule B (580 MWe) Water shortages means the use of air-cooled power stations, therefore low efficiency, but necessary

23 Future coal projects Morupule Colliery could increase production by 5-10 Mt/y (partly with a new opencast mine) Sese Coal & Power (AER) 2.6 Gt resource, steam coal for export. Tender for 2x300 Mwe IPP announced Mmamantswe opencast project planned by Aviva/Mawana Minerals Serowe export project in Morupule (Weldon Inv./CIC)

24 Export options 1300 km to Mozambique s Maputo/Matola coal port via Zimbabwe 1500 km to Namibia s Walvis Bay (proposed) to Atlantic coast Mmamabula to Waterberg (SA) for transit to Eskom or to Richard s Bay Coal terminal

25 Botswana s power dilemma While coal exports are clearly part of the overall strategy, Botswana is woefully short of electricity Botswana Power Corp produced 370 GWh, while Botswanan demand reached 3600 GWh! 90% of Botswana s power is imported (SA plays an essential role) New Morupule B 600 MWe will go some way to fill the gap Other sources could include coal bed methane being investigated by Shell, BP and Anglo- American

26 Zambia With a population of 13 m, just 16% of households have access to electricity Zambia s economy is dominated by copper production (75% of foreign exchange earnings) Copper industry accounts for 55% of electricity demand in the entire country (and 37% of oil demand)

27 Coal supplies in Zambia Reserves not fully known, although estimates range Mt; with further potential in new discoveries in southern Zambia One privately owned mine produces (Maamba), and one state-owned mine (Collum) produce 1 Mt/y each Maamba mine owned by Maamba Collieries Ltd (MCL) has been upgraded recently to push production to 1 Mt/y Small amounts of imports from Zimbabwe All for industrial consumption: cement (Lafarge), steel, and fertiliser manufacture

28 Coal-fired power a new beginning? Zambia has no coal-fired power (almost entirely hydro) drought had led to several periods of power shortages Need for thermal generation, chiefly oil and coal For coal, a 300 MWe CFBC plant at Maamba Colliery is due online in 2014 (developed by Nava Bharat) Offtake agreements with Zesco with a 20 yr PPA Burning low grade coals, either ROM or middlings from coal prep plants Coal demand could be further boosted by potential exports to Congo

29 Zimbabwe Similar to Botswana and Zambia, Zimbabwe is landlocked - Reliance on Mozambique for coastal access 40% of the population has access to electricity - better than most for the region Coal is found across much of the country mostly in regions close to Botswana border

30 Limited reserves but good quality Estimated 500 Mt of economically recoverable reserves (but could be 10 Gt) Annual production 2-3 Mt/y Coal qualities are good, with high CVs and low ash contents, but sulphur content can be around 1% At least 10 private companies operate in the coal industry (many foreign owned SA, UK, China) Black empowerment policy for mining companies

31 Coal resources in Zimbabwe Zambezi area in far west where Hwange is located contains the richest recoverable resources, with 2101 Mt in the Hangwe area

32 Coal market Limited to Zimbabwe Power Company (ZPC); Hwange power station uses >50% of all coal sold in Zimbabwe Other industries include tobacco and steel sectors

33 Coal export potential is via ports in Mozambique and South Africa Exports are currently only via the ports located on the Indian Ocean, these ports are in Mozambique and South Africa Hwange coalfield is close to the Zambian border, which itself is landlocked. The Mozambique coast offers a number of export ports But, at a similar distance to the transport of Russian coals to the Baltic ports

34 Hwange (Wankie) Coal Colliery Centre of coal production is around the Hwange Colliery Co Ltd (HCCL) Key markets: 900 MWe Hwange power plant (owned by ZPC), cleaned coal supplies other industrial customers Hwange coal-fired power station supplies 40% of the Zimbabwe s power supply (3200 GWh out of 8000 GWh total supply) Hwange occasionally suffers from output problems and outages (sometimes producing as little as 100 MWe) Three other smaller coal stations operate in and around metropolitan areas; all operated by ZPC

35 Zimbabwe power capacity Peak demand for power is 2200 MW, while coal and hydro capacity is just 1800 MWe Available capacity is closer to MWe Numerous plans to boost capacity to >5 GWe by GW of coal at several sites 2.4 GWe IPP at the Sengwe Colliery owned by Rio-Zim

36 National Energy Policy (NEP) Increase electricity transmission and generating capacity to 10 GWe by 2040 A great deal of current development comes from hydro power Zimbabwe Electricity Supply Authority (ZESA) is a vertically integrated company overseeing transmission, distribution, and generation through subsidiaries

37 Prospects for new power generation includes coal

38 Conclusions and final thoughts Southern African nations have a lot in common Coal production an developments are at varying stages of infancy Coal reserves surveys are ongoing Foreign and/or private corporations have established themselves across the region Coal production being spearheaded by coal exports, but timing and volumes are uncertain; Mozambique almost certain to be a hub for exports Further demand from new power projects These are being developed with coal mine expansion Electricity demand also driven by the mineral industry