Coal news and updates

Mozambican coal attracts Spanish, while two new projects are launched

Spanish business is eager to get involved in Mozambique’s coal and natural gas sectors. This became clear at the Spain-Mozambique Business Summit, in Maputo, held on October 8 and 9. The interest is both in the exploration and exploitation of these natural resources and in the establishment of the infrastructure to enable and support these activities, including transport and energy.
 
“In recent years we have observed the tendency, we are seeing, many countries, including those which previously did not have any relationship with Mozambique, become partners, attracted by the mineral resources,” said Spanish enterprise Gás Natural strategy and upsteam development director Antonio Hernando at the summit. “Spain has been a partner of Mozambique for dozens of years; let us then advance this bilateral relationship by means of institutional strengthening at the embassy and chamber of commerce level.”
 
Interestingly, the Mozambique government urged the Spanish to give particular attention to the opportunities in the African country’s agricul- tural sector. “The excellent diplomatic relations and cooperation between Spain and Mozambique are the platform which provides opportunities in the agrarian sector, [in which] the potential that Mozambique has is 36-million [no unit given] of arable land and a low level of commercial agricultural activity,” asserted Trade and Industry Minister Armando Inroga.
 
Not that Maputo is neglecting mining. Early this month, the Mozambique government closed two new deals for coal exploration and mining in Tete province. The contracts, with global mining major Rio Tinto and Mauritius-domiciled Midwest Africa, were signed by Mineral Resources Minister Esperança Bias.
 
Rio Tinto’s concession covers 9 707.1 ha and the group anticipates investing $3.3-billion in a mine that will be located about 10 km from the city of Tete. Initial production is forecast to be 3.5-million tons a year (Mt/y) of coal, rising to 12-Mt/y, mostly composed of metallurgical or coking coal. Exports are expected to start in 2016.
 
The Mozambique government will have a 5% free share in the project, while another 5% will be made available on the Mozambique Stock Exchange for purchase by Mozambican citizens. For the first three years of the project, Rio Tinto will also invest $5-million in social projects in the local communities affected by the development of the mine. It is expected that the project will create 1 404 jobs. This is Rio Tinto’s second coal project in Mozambique, after the Benga mine, which is also in Tete province.
 
The Midwest Africa con- cession embraces 15 840 ha. Its planned operation lies in the Ncondezi basin in Tete, some 50 km from Tete city. The required investment is expected to be just over $1.4-billion, of which 5% will be devoted to social projects in the local communities. The feasibility study sub- mitted to the Mozambique government reported reserves of 453-million tons of coal, divided into 363.71-million tons of metallurgical coal and 90.21-million tons of thermal coal.
 
The company expects to create 1 320 jobs and plans to enter production in 2015. Initial production is expected to be nearly 1.4-Mt/y. This figure will gradually increase during the following years. Midwest Africa plans to export its coal down the Sena and Nacala railways lines. The former runs to the port city of Beira, while the latter, owned by a subsidiary of Brazilian mining major Vale, is currently being renovated and extended.
 
Both new projects are expected to be important sources of tax revenue for the Mozambique government. For example, once its project starts operations, Midwest Africa will pay various taxes to Maputo with a total annual value of $35-million. Bias gave the estimate for Rio Tinto’s annual tax payments from its new project (once it is in operation) in terms of Mozambique’s currency – 27.69-billion meticais (at current exchange rates, about $937-million).

Source: mining weekly