Anglo-Australian mining major Rio Tinto last week announced a further write-down of $470-million for Rio Tinto Coal Mozambique (RTCM). This followed a few days after reporting that production at its Benga coal mine, in Mozambique’s Tete province, had increased by some 230% during last year. RTCM’s main assets are Benga, in which it holds a 65% share (the other 35% is owned by India’s Tata Steel), and the wholly owned Zambeze coal project.

Back in January 2013, Rio Tinto was forced to announce a reduction in the book value of RTCM and the group had to take an impairment in its accounts of $3-billion as a result. Rio Tinto had bought the Benga project from Australian junior Riversdale Mining in 2011 for $4.1-billion. At the time of this first impairment, Benga was valued, by Deutsche Bank, at $370-million. The latest write-down means that RTCM impairments are now only $630-million less than the price the group originally paid for Benga.

In the press release of its 2013 results, Rio Tinto stated: “[The new] valuation of RTCM is based on an assessment of FVLCD (Fair Value Less Cost of Disposal) derived from discounted future cash flows, which included a reassessment of the development plan and review of the discount rate and associated country risk premium, resulting in the recoverable value being below carrying value. “Impairment of intangible assets was US$259-million, of property, plant and equipment was US$22-million and of investments in equity accounted units was US$216-million.”

Following the original impairment, in the 2012 financial year, then new Rio Tinto CEO Sam Walsh assured that his company was not considering pulling out of Mozambique. Revealing the new impairment, the group made no mention of whether or not it was reconsidering its involvement in the African country.

On the production side, RTCM’s output of coking or metallurgical coal in 2013 was 867 000 t, a jump of about 300% over the 2012 figure of 289 000 t. Thermal coal output last year was 754 000 t, some 180% more than the 2012 quantity of 419 000 t.

For 2013 (for Rio Tinto, the financial year is the same as the calendar year), RTCM had a gross revenue of $88-million, compared with the $10-million for 2012. Earnings before interest, taxes, depreciation and amortisation were negative $114-million, compared with negative $64-million in 2012. A net loss of $142-million last year represented a decline in relation to 2012, when the loss was $92-million.

Capital expenditure by RTCM in 2013 came to $32-million, whereas the figure for 2012 was $109-million. Depreciation and amortisation came to $28-million last year, compared with $29-million for the year before.

RTCM’s operating assets were valued at $119-million for last year, down from $556-million in 2012. Rio Tinto defines operating assets as “net assets excluding postretirement assets and liabilities, net of tax, before deducting net debt”. “Operating assets are stated after deduction of noncontrolling interests, which are calculated by reference to the net assets of the relevant companies (that is inclusive of such companies’ debt and amounts due to or from Rio Tinto Group companies).” Results figures for 2012 have been restated, in order to take into account changes in the group’s accounting policies.