Mchuchuma power station

From Global Energy Monitor

The Mchuchuma power station is a proposed 600-megawatt (MW) coal-fired power station in Tanzania associated with the Mchuchuma Coal Mine.

Location

The map below shows the location of the Mchuchuma, Iringa, Tanzania, but not the exact location of Mchuchuma power station.

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Background

In September 2011, China's Sichuan Hongda Co. Ltd. signed a US$3 billion deal with Tanzania to mine coal and iron ore in Tanzania. The investment involved construction of the Mchuchuma Coal Mine, a 220kv transmission line between Mchuchuma and Liganga for supplying the Liganga Metallurgical Complex, and an accompanying 600-megawatt (MW) thermal power station. 250 MW from the power plant would be devoted to the Liganga Metallurgical Complex, with the remaining 350 MW provided to the national grid. It was estimated that Mchuchuma coal deposits have more than 480 million tonnes of coal reserves.[1][2]

In 2013, it was reported that the power station would be constructed over the next three years, with the first 300 MW planned by 2015.[3]

However, in October 2014, it was reported that construction would begin on the projects in 2015, and expected to be completed by 2019.[4]

The estimated cost for Mchuchuma and Liganga iron ore mines and plants was US$3 billion, which would be sourced in partnership between the Tanzania government and Sichuan Hongda. In January 2015, it was reported that the government was having difficulty securing the funding, given budget constraints.[5]

In May 2016, it was reported that work on the mining projects had been pushed to 2017.[6]

According to an October 2016 report, the process of evaluating compensation for 126 households around the Mchuchuma projects (290 individuals) and the 19 households and farms around the Liganga project (299 individuals) was completed in September 2015, but the process of compensating the villagers was not subsequently carried out.[2]

In March 2017, it was reported that the government was in the midst of settling issues with investors regarding incentives and power tariffs. It was expected that conclusion of the negotiations would lead to funds being released to compensate people relocated for the projects. Mining would then begin.[7]

According to a March 2017 report, the mines ministry had opened an inquiry into the performance of Sichuan Hongda Group in the wake of disappointment with the firm's performance.[8]

In September 2018, it was reported the country would need US$645.75 million for the plant, and that the project’s feasibility studies still needed to be actualized.[9]

Plans Revived following Uncertainty

In May 2020, the government reaffirmed its plans to proceed with the plant. The ministry also told Parliament that a lack of funds and technology to drill iron core were key reasons behind the continued delay.[10]

In January 2021, it was reported Tanzania China International Mineral Resource Ltd (TCIMRL) was asking for tax incentives on import duty on goods to be imported for the construction work, incentives on spare parts and machinery, and relief on fuel. The Chinese firm’s parent company, Sichuan Hongda Group Ltd (SHG), "discharged its part of the contract by carrying out geological exploration, environmental and social impact assessment, valuation for purposes of compensation of people affected by the project, research, as well as development for smelting technology to the tune of about $70 million."[11] These requests were contrary to the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 along with the Natural Wealth and Resources (Contract Review and Renegotiation of Unconscionable Terms) Act of 2017.[12]

In June 2021, President Samia Suluhu Hassan called for the removal of red tape delaying the implementation of the Mchuchuma and other projects, saying it was high time the projects take-off. She said there was a need to establish the reasons behind the delay of the strategic extractive projects, and added the government would not hesitate to act if the investor was incapable of implementing the projects.[13] Tanzania also budgeted 2.34tri/- for power generation, transmission, and distribution projects, including an SGR line between Liganga and Mchuchuma. The Mchuchuma Coal project was identified as a flagship project. (Assuming "/-" represents TZS and not KES, this was an estimated US$1 billion.)[14][15]

By the end of 2021, drilling exploration was completed, Social Impact Assessment (ESIA) studies had been completed, and ESIA certificates and licenses for mining coal and water rights for use of Katewaka and Mchuchuma Rivers had been obtained. The government and TCIMRL also signed a Strategic Investor Status Certification and Performance Contract.

In May 2022 Parliament debates over the 22/23 national budget, members pushed at why the government has been "dragging their feet" over the strategic investment for over a decade. The project was still actively being pursued at this point, with ongoing issues such as land acquisition being addressed by the Lands Ministry and the Attorney General's Office.[16] China's pledge to halt all foreign investments in coal projects is likely also contributing to this delay.

Project Details

  • Sponsor: Tanzania China International Mineral Resources Limited
  • Parent company: Sichuan Hongda Group (80%), National Development Corporation (20%)[12]
  • Location: Mchuchuma, Iringa, Tanzania
  • Coordinates: -9.25, 34.25 (approximate)
  • Status: Pre-Permit Development
  • Gross Capacity: 600 MW (4 x 150 MW)
  • Type: Subcritical
  • Start date:
  • Coal Type:
  • Coal Source: Mchuchuma Coal Mine
  • Source of financing:

Articles and resources

References

Related GEM.wiki articles

Mchuchuma Coal Mine

External resources

External articles