Skip to main content

Energy Business Case - Coal Mine in West Virginia


Coal in Africa: An opportunity is available to invest in a coal mine in West Virginia. The mine’s value is less than in past years because of actual and anticipated restrictions on coal-fired power generation in the United States. However, the mine has a chance to sell its coal on contract to a public utility in West Africa. The utility is working through the World Bank for financing to build a number of coal-fired power plants. If they obtain World Bank financing, then a customer for the coal mine is assured, at least for the duration of the contracts. The power plants will employ the best current technology for burning coal, which exceeds all current air quality standards for the region. However, the power plants will not be designed to attempt carbon capture. The area of Africa the plants will serve suffers from extreme energy poverty, with some of the lowest per capita energy consumption in the world.

Overview of the Region

West Africa is the westernmost region of the African continent. It has been defined in Africa as including the sixteen countries of Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo.

Figure 1 West Africa region

According to International Renewable Energy Agency report in 2013 there is a high projected demand growth for the region:

SWOT Analysis


Lower mine’s value at acquisition
Already set infrastructure and logistics

Commodity product
No presence in the region

Job creation
Growing projected demand for electricity in the region
Renewable energy has still got higher production cost therefore coal-burning electricity will be the better alternative for the region

Finance should be approved by World Bank
Political instability of the region
Increasing pressure from environmentalists and political markets
Renewable energy sources promotion in the region

As per EIA Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2014 report, coal is cheaper than renewable energy especially for the West African region: 

Figure 4 Estimated Levelized Cost of Electricity (LCOE) for New Generation Resources, 2019

Conclusion It is an interesting opportunity, however a couple of items should be considered:

1. Financing is dependent on the World Bank approval. In today’s atmosphere surrounding issues of climate change, environmental pollution, increasing carbon taxes etc. it may block the entire initiative if the financing is not approved because World Bank will be put under pressure.

2. Political instability of the region. The region is prone to wars and government overturns very often. This is a huge risk to the entire undertake, because the current contracts may become invalid or the damage may be brought to plants.

Economically it looks very attractive, because at the moment there is not much power generating facilities in the region, but demand projections looks very good therefore huge potential.


Popular posts from this blog

Mastering The Multitasking

There is usually two distinct perspectives on multi-tasking:

1. Multitasking is counterproductive. We get distracted by multiple tasks that all get our way and fight for our scarce attention, time and resources. This leads to a common fallacy that if you do multiple activities “at a time” you are not doing good work in any of those.

2. Multitasking is a way of getting many things done in a short period of time or in a long run.

Indeed it can be either a disaster or a great helper depending on how it is used and practiced.

Most recent research shows that we don’t do multiple tasks purely in parallel or simultaneously. That means we don’t purely multi-task, but switch between tasks and execute them one at a time, but by spending very small timeframes on each task.

A good example from the history is a story about Julius Caesar capabilities in that area. Plutarch writes, “Caesar disciplined himself so far as to be able to dictate letters from on horseback, and to give directions to two w…

Energy Market Analysis - Coal Reserves for Decade Ending 2012 and Price Forecast

According to the British Petroleum Statistical Review of World Energy, 2013, global coal reserves declined in the decade ending 2012:

Figure 1. Proved coal reserves.

Proved reserves of coal are generally taken to be those quantities that geological and engineering information indicates with reasonable certainly can be recovered in the future from known deposits under existing economic and operating conditions.

If we look at supply and demand factors in the decline, we can see that:

a) Coal price has grown significantly in the decade ending 20121:

  Figure 2. Prices in US Dollars per tonne.

b) Coal consumption has also grown significantly worldwide2:

Figure 3. Coal consumption by region.

c) The price of substitutes (i.e. Natural Gas) has also grown. Not so in North America though, but if we look at the world trend it is growing3:

Figure 4. Natural gas prices.

Therefore if the rule of supply and demand worked we would see increase in proved reserves for coal, because increase in dem…