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As one miner leaves Mozambique, others plan to further develop their projects

17th October 2014

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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Mining major Rio Tinto announced on October 8 that it had concluded the sale of Rio Tinto Coal Mozambique (RTCM) to India’s State-owned Indian Coal Ventures Private Limited (ICVL), “following the fulfilment of all conditions precedent and receipt of the necessary regulatory approvals”, the Anglo Australian group said in a brief press release. The sale was first disclosed on July 30. The deal encompasses Rio Tinto’s share in the Benga operation and other coal projects in Mozambique’s Tete province. “Rio Tinto’s other assets in the country remain unaffected by the transaction.”

RTCM held 65% of the Benga coal operation, besides owning two other coal projects – Tete East and Zambeze. The remaining 35% of Benga is held by Indian private-sector group Tata Steel. Rio Tinto originally acquired Benga from Australian junior Riversdale Mining in 2011 for $4.1-billion. However, since then the global mining group has had to write down $3.47billion of that investment. In the end, RTCM was sold to ICVL for just $50million. During the first semester of this year, Benga produced 246 000 t of metallurgical (or coking) coal and 230 000 t of thermal coal.

ICVL is a “special-purpose vehicle” created at the initiative of the Indian Ministry of Steel for the purpose of obtaining metallurgical and thermal coal assets in foreign countries in order to assure the supply of imported coal. It is a partnership between the Steel Authority of India Limited, Coal of India Limited, Rashtriya Ispat Nigam Limited (a steel company), the National Mineral Development Corporation and NTPC (India’s largest power producer). All these companies are wholly or predominantly State-owned. The acquisition of Benga is a major step in fulfilling ICVL’s mandate. The Mozambique operation has reserves of 2.6-billion tons, 70% of which is metallurgical coal, used in steelmaking.

Meanwhile, also in Tete province, Joaquim Cherene, the district administrator of Chiúta, in the north-east of the province, has told the Mozambique newspaper Notícias that he expected the start of iron-ore mining in the district within two years. He said that Australian junior Baobab Resources was already carrying out the final preparations required to start mining within the next 24 months. “There is no doubt and everything indicates that, in 2016, the exploitation of iron [ore] in our district starts, and, presumably, buyers are turning their eyes to Chiúta,” he affirmed.

Baobab Resources’ Tete project is an iron-ore and ferrovanadium enterprise. The company holds 85% of the project, with the other 15% belonging to the International Finance Corporation. In July, the company reported that pilot-scale smelting trials of ore from Tete were under way at South African mineral and metallurgical processing and engineering agency Mintek. In parallel, pilot-scale direct reduction tests were being done at the US laboratories of Danish minerals and cement engineering, equipment and services company FLSmidth.

Cherene also reported that the Mozambique government’s geology research programme in his district was continuing. The results should be made public in the near future. “Our district possesses a lot of wealth in its subsoil and, if the exploitation goes well, we should experience another level of socioeconomic development in this region and in the country, in general,” he averred.

Further, he stated that there was a plan to build a branch line, from the Sena railway main line, at Moatize, to Manje, the chief town of the Chiúta district. The Sena line, runs from Tete city to the port city of Beira and is currently the main route for coal exports from the mines in the province. “The mining company, ENRC, which operates in Chissua, in the Cahora Bassa district, on the right bank of the Zambesi river, intends to construct a branch alongside Chiúta, on the left bank, which will link Manje to the town of Moatize, and thence to the Port of Beira,” said Cherene. (ENRC is a major diversified mining group, based in Kazakhstan, but registered and with its head office in London.) He added that the company had been carrying out environmental impact and economic viability studies on the proposed branch line since the end of 2011, and these were now in the final stages. Construction of the line could start in the very near future.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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