A $600 million coal mining operation involving the Tanzania government and a consortium of three international firms will start at Mchuchuma, near Lake Nyasa, towards the end of next year.

Siemens Ltd, Grinaker-LTA and Cinergy Global Power Inc, which signed an agreement with the government mid last year to undertake the project together with the National Development Corporation (NDC), are working on the project verification document to determine costs and other parameters of the project.

A senior official of the NDC said the mine was expected to be commissioned by 2006 or 2007 and would have a production capacity of 1.5 million metric tonnes per year. The official said the NDC had completed a feasibility study on the project, which will be a surface coal mine. An environmental impact assessment study has already been endorsed by the National Environment Management Council. 

The Mchuchuma Coal Field in Ludewa District, Iringa Region, is located 946 km southwest of Dar es Salaam, close to the border with Malawi in the west and Mozambique in the south. It will be the biggest coal field in Tanzania, generating 400 MW of power.

Manda Village, which is near the coal field, will be upgraded to a township to provide dwellings for the 500 workers who will be employed by the mine when it is fully operational. The area's infrastructure, including roads, will also be improved.

Siemens Ltd, Grinaker-LTA and Cinergy Global Power Inc were selected from among companies which responded to a worldwide campaign seeking investors for the project. It was conducted at various international conferences, including the World Economic Forum, in the local and international press and during President Benjamin Mkapa's visit to the US in 1999.

Studies show there are 536 million tonnes of coal reserves at Mchuchuma, which will be used mainly for power generation and later to provide energy to the nearby Liganga iron ore project in Ludewa district.

Studies on the iron ore deposits indicate that they are rich in iron oxide, vanadium oxide and titanium dioxide, with reserves of between 200 million and 1,200 million tonnes.

However, only 45 million tonnes have been proved through drilling.

The NDC plans to exploit the Liganga titaniferous ores for the purpose of processing vanadium and titanium concentrates for export, and iron and steel products for local, regional and international markets. 

The Liganga project is currently at a promotional stage and its development will depend on the success of Mchuchuma.