Investors must have Sh17.6bn to mine coal in Mui

Sunday September 7 2014

Energy cabinet secretary Davies Chirchir and fenxi Mining Vice President Yang Wusheng exchange the coal mining contract documents at Musila gardens in Mwingi town on December 23, 2014. According to the conditions issued by the government interested in extracting coal in the remaining two  blocks of Mui Basin in Kitui must raise Sh17.6 billion. PHOTO| KITAVI MUTUA

Energy cabinet secretary Davies Chirchir and fenxi Mining Vice President Yang Wusheng exchange the coal mining contract documents at Musila gardens in Mwingi town on December 23, 2014. According to the conditions issued by the government interested in extracting coal in the remaining two blocks of Mui Basin in Kitui must raise Sh17.6 billion. PHOTO| KITAVI MUTUA  NATION MEDIA GROUP

By KITAVI MUTUA
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Investors interested in extracting coal in the remaining two blocks of Mui Basin in Kitui must raise Sh17.6 billion.

According to the conditions issued by the government, prospective investors must demonstrate their technical capability and a history of coal mining projects of similar nature in at least three developing countries.

The government’s decision to concession blocks A and B will see two mining companies involved in extracting the resource simultaneously.

Blocks C and D were awarded three years ago to Fenxi Mining Company of China.

The eligibility criteria was contained in an advertisement placed by the Ministry of Energy and Petroleum in the dailies that invited bids from international companies.

“Those interested will have to prove ability to raise funds in excess of $200 million (Sh17.6 billion in current exchange rates) for the projects and a clear demonstration of effective environmental preservation,” the tender notice read.

INVESTOR APPRAISAL
Bidders for coal blocks C and D were required to prove their capability of raising Sh8 billion, nearly half of what is required of the new investors.

Firms wishing to bid for the project must also prove that they have required tools, materials and technology to extract at least 3,000 tonnes of coal daily.

The concession and eventual award of contract means that mining across the four blocks in the 490 square kilometre Mui Basin will ultimately be running at the same time.

The tenders were advertised as Energy Cabinet Secretary Davies Chirchir met the Chinese investors on Friday to resolve issues that have caused delays since the signing of the Benefits Sharing Agreement in December last year.

Mr Chirchir is expected to meet Kitui leaders and the Mui Basin Community Liaison Committee this week to discuss the formation of the land compensation and resettlement committee among other key issues.

ENERGY SOURCE

Fenxi Mining Company is currently doing the environmental impact assessment, one of the key milestones that will see affected households moved in readiness for the actual excavation.

When the mining starts, the coal resource would stop the over-reliance on hydro-power.

The coal will also cushion the economy from rising global oil prices.

The coal deposits are billed as an alternative source of cheaper energy at a time when the country needs affordable power to drive Vision 2030, the economic blueprint which aims to make Kenya an industrialised country in 16 years.

Samples of the coal deposits extracted during the exploration have been chemically analysed and found to meet the required standards - an average calorific value of 18MJ/Kg.

The mineral forms in swamps and bogs where water is deficient in oxygen and where organic matter accumulates faster than it decomposes.

The basin has been sub-divided into Zombe, Kabati, Itiko, Mutito, Yoonye, Kateiko, Isekele and Karunga sub-basins.