Tuesday, September 8, 2009

Energy mineral expected to bring considerable 
revenues for Mozambique

By: Keith Campbell, 28th August 2009

Mozambique expects to earn revenues of $1,5-billion annually from 2015 from coal projects now being 
developed by foreign investors in the province of Tete in the north-west of the country. This has been revealed by the country’s national director of mining, Eduardo Alexandre. “Our forecasts are based on the hopes of seeing coal production and exports beginning in 2011 as per [mining companies] plans,” he told the Reuters news agency. “This is a resource which will also attract other investors.” Tete is one of the biggest unexplored coal provinces 
in the world.

The companies currently developing the province’s coal reserves are Brazil’s Vale, with the Moatize project, and Australia’s Riversdale Mining, with the Benga project. Benga is actually a joint venture (JV) between Riversdale, which holds 65% of the project, and India’s Tata Steel, which owns the remaining 35%. Between them, Vale, Riversdale and Tata are investing more than $2-billion in coal projects in Tete. Of this, $1,3-billion is coming from Vale, for Moatize, while $800-million is being invested in Benga by Riversdale and Tata.

The Mozambican government hopes that the country will become Africa’s second-largest coal producer, after South Africa, once both projects are in full production. Moatize is predicted to have a full annual production capacity of 8,5-million tons of hard coking coal and 2,5-million tons of thermal coal, and has 
proven and probable reserves of 838-million tons. Benga has 319,9-million tons of measured resources, and 730-million tons of indicated resources. The country’s total coal reserves are estimated at ten-billion tons.

“The two firms, Vale and Riversdale, will generate annual coal revenue of $1,5-billion in 2015 when both projects are fully up and running,” said Alexandre. “This is a realistic forecast given demand.”

Meanwhile, the outgoing Indian high commissioner to Mozambique, Rajinder Bhagat, has given the assurance that the Sena railway line will be completed by October at the latest. 
The Sena line is essential for the Tete coal projects, as it is the railway down which the mines’ output will be transported to reach the export terminal on the coast. It runs for 
545 km from Dondo (30 km west of the port city of Beira) to Moatize, and also has two branch lines – one which crosses the Zambezi river by means of the Dona Ana railway bridge and runs to the border with Malawi, a distance of 44 km; and the other, which runs 
82 km from Inhaminga to Marromeu.

It is expected that some thermal coal will be exported to Malawi along the first of these branch lines, while more thermal coal is likely 
also to go by way of rail to Zimbabwe, Zambia 
and, perhaps, parts of the Democratic Repub-lic of Congo. 
This coal could be railed down the Sena line to Dondo, and then up the Beira–Harare line and, thence, by way of Bulawayo and Victoria Falls, to Zambia and beyond.

The Sena line is being rebuilt by an Indian-led JV consortium, which is composed of two specialist subsidiary companies of State-owned Indian Railways, namely Rites and Ircon, and Mozambique Railways. Rites is the lead partner, and holds 26% of the JV, while Ircon holds 25% and Mozambican Railways 49%.

The reconstruction of the line was 
delayed by the flooding in the Zambezi Valley in January, which had been the original target date for completion. The floods damaged parts of the line that had already been rebuilt. The formal handover of the line is now meant to happen next month, and this, Bhagat indicated, might still happen.