Vedanta’s Zambian Unit Plans Coal Power Plant to Reduce Costs

Konkola Copper Mines Plc, Vedanta Resources Plc (VED)’s Zambian unit, said it’s exploring for coal and may build a power plant in Africa’s biggest copper producer to reduce electricity costs.

KCM, which started exploration at the prospect in the Sinazongwe district of Zambia’s Southern Province this year, may build a power station to generate as much as 300 megawatts, provided it finds enough coal with the necessary energy levels, said Strategy and Business Development Director Brad Gnanasivam.

“It’s an option that we are trying to develop for ourselves so that we’re not stranded,” he said in an interview today in Lusaka, the capital. “If power rates continue going where they are going, at some point it will become very unsustainable, especially at the kind of power that we consume.”

Konkola Copper Mines is the biggest power consumer in Zambia, using as much as 250 megawatts, or about 13 percent of the country’s total generation capacity. Zesco Ltd., Zambia’s state-owned power producer, applied for a 26 percent average price increase last year, and the regulator is yet to decide on the request. KCM halted plans to fire 2,000 workers in June in favor of reducing production costs. One megawatt is enough to power about 500 to 1,000 U.S. homes.

KCM would want to have its own power station producing by 2020, when an electricity supply contract with Copperbelt Energy Corp. expires, Gnanasivam said. Maamba Collieries, a unit of Nava Bharat Singapore Pte Ltd., is building a 300-megawatt coal power plant in Sinazongwe district, while EMCO Energy Zambia plans to build a thermal power plant twice that size in the same area.

Power prices in Zambia may need to double by 2015 to make it viable to build new generation capacity and end a supply shortage, CEC Energy said last year.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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