Business / Companies
SA coal miner eyes $5.5 billion coal-to-liquids plant in Zimbabwe
23 Nov 2011 at 06:04hrs | Views
South African coal miner LontohCoal plans to build a 50,000 barrels-per-day coal-to-liquids plant in Zimbabwe, with commissioning expected in 2017, its chief executive officer Tshepo Kgadima said on Tuesday.
He said the CTL plant, expected to cost $5.5 billion, would be supplied by thermal coal coming out of the Lubimbi coal project, in which the company holds a 51 percent stake. Lubimbi is expected to produce 27 million tonnes of thermal coal a year.
"We've just completed a scoping study on the coal-to-liquids plant and post our IPO will start spending money on the design and engineering phase ... it's a long-term project, but 2017 is our target commissioning date," Kgadima said.
"We believe by then demand for liquid fuels from the region, especially for diesel, will be big. For Zimbabwe alone it will be more than 2,000 bpd, but there is also increased demand from other landlocked countries in the region," he said.
Kgadima said he did not foresee any difficulties in raising money for the project, even if it is to be based in Zimbabwe, adding political risk in the country was likely to ease.
The company plans to raise up to $500 million when it lists in Hong Kong in early 2012.
The listing had been delayed slightly as the company sought to secure an offtake agreement for a big part of its coal, which Kgadima said would make it more attractive to investors.
LontohCoal decided to have its primary listing in Hong Kong as opposed to Johannesburg given its large exposure to Asia.
"We have a China story. Eighty percent of our (coking coal) production from Zimbabwe and 50 percent of our South African anthracite production is going to China, so Hong Kong is a more natural fit for us," Kgadima said.
The 18 million tonnes of coking coal per year expected from the Lubimbi deposit in Zimbabwe would be exported, most of it destined for China, he added.
The coking coal will be moved via a coal-slurry pipeline to a deep-water port in Mozambique. The cost for the development of the pipeline and the port is forecast at $1.2 billion.
LontohCoal's Kwasa anthracite mine in South Africa produces 40,000 tonnes per month, but is being ramped up to around 100,000 tonnes a month. Its Hlobane View colliery is being developed to produce 1.2 million tonnes of coal per year and will later be ramped up to produce 1.8 million tonnes.
He said the CTL plant, expected to cost $5.5 billion, would be supplied by thermal coal coming out of the Lubimbi coal project, in which the company holds a 51 percent stake. Lubimbi is expected to produce 27 million tonnes of thermal coal a year.
"We've just completed a scoping study on the coal-to-liquids plant and post our IPO will start spending money on the design and engineering phase ... it's a long-term project, but 2017 is our target commissioning date," Kgadima said.
"We believe by then demand for liquid fuels from the region, especially for diesel, will be big. For Zimbabwe alone it will be more than 2,000 bpd, but there is also increased demand from other landlocked countries in the region," he said.
Kgadima said he did not foresee any difficulties in raising money for the project, even if it is to be based in Zimbabwe, adding political risk in the country was likely to ease.
The company plans to raise up to $500 million when it lists in Hong Kong in early 2012.
The listing had been delayed slightly as the company sought to secure an offtake agreement for a big part of its coal, which Kgadima said would make it more attractive to investors.
LontohCoal decided to have its primary listing in Hong Kong as opposed to Johannesburg given its large exposure to Asia.
"We have a China story. Eighty percent of our (coking coal) production from Zimbabwe and 50 percent of our South African anthracite production is going to China, so Hong Kong is a more natural fit for us," Kgadima said.
The 18 million tonnes of coking coal per year expected from the Lubimbi deposit in Zimbabwe would be exported, most of it destined for China, he added.
The coking coal will be moved via a coal-slurry pipeline to a deep-water port in Mozambique. The cost for the development of the pipeline and the port is forecast at $1.2 billion.
LontohCoal's Kwasa anthracite mine in South Africa produces 40,000 tonnes per month, but is being ramped up to around 100,000 tonnes a month. Its Hlobane View colliery is being developed to produce 1.2 million tonnes of coal per year and will later be ramped up to produce 1.8 million tonnes.
Source - Reuters
