Paladin (Africa) Limited (PAL), owners of Kayelekera Uranium Mine (KM) in Karonga, will have to wait a while longer before they tap into the national power grid to access 10 megawatts (MW) for their mining activities.
All along, PAL has, since mining works started in 2007, been using diesel-powered generators 24/7 because of the power constraints by the country’s sole power supplier, Electricity Supply Corporation of Malawi (Escom).
But the company’s officials were attracted to consider tapping into the grid because, firstly, of the coming onto the scene of Kapichira Hydro Power Plant which has added 64MW, bringing the country’s power capacity to 351MW against the demand of 350MW.
The power plant in Chikhwawa was commissioned by Malawi President Joyce Banda a fortnight ago.
Secondly, Paladin had been talking to Escom to upgrade their distribution network, particularly in the Northern Region to enable the power supplier to transmit reliable power.
But Greg Walker PAL general manager for international affairs told Business News on Tuesday: “Discussions are still underway with Escom.”
He said the additional 64MW is a win for the company because they will have to replace diesel with hydro power.
The use of hydro power is also good for the environment because hydro is cleaner power than burning diesel.
Escom public relations manager Kitty Chingota had not yet responded to the questions sent on Tuesday.
Business Review wanted to find out how far the discussions have gone between the two companies and when power supplier can avail power to the miner.
In an earlier interview, Walker said Paladin will be saving $20 million (about K9 billion, at the present exchange rates) a year on fuel, an equivalent of 10 percent of the miner’s C1 costs.
C1 costs are cash costs, including mining processing, site administration and refining, among others.
KM uses about 1.5 million litres of diesel a month which costs K1.1 billion (about $27.5m) translating to K13.2 billion (about $33m) a year at the current price.
Effectively, this means the potential connection to the national power grid is cheaper and the company has continued its cost optimisation with a focus on savings on commercial grid power, acid, reagents, diesel and transport, according to John Borshoff, managing director and chief executive officer of Paladin Energy Limited, the parent company of PAL.
Unreliable power has, for a long time, been a thorn in the flesh of households and businesses heavily affecting production purposes.
Mining activities, which have of late taken centre stage in Malawi, require reliable and adequate power supply because of the use of heavy machines.
Some three or so year ago, Eland Coal Mining Company, a subsidiary of Heavy Mineral Limited (HML), rolled out plans to invest $300 million in the setting up of a 300MW coal-powered plant to cater for its mining activities at Mwabulambo in Karonga. The plans were, however, put on hold.
HML are also the owners of Allied Procurement Agency, operators of the Chipoka Sands Project in Salima, whose production also stalled because of insufficient power from Escom.
The additional 64MW has brought excitement on government authorities and other economic players, but some energy analysts have argued that the honeymoon could be short-lived because the Malawi economy’s energy requirements are quite huge.