Indian State-owned company International Coal Ventures Limited (ICVL), which recently acquired the assets of Rio Tinto Coal Mozambique (RTCM), reportedly for $50-million, has announced that it intends to invest $500-million over the next three years in logistical infrastructure in Mozambique. So reports the Maputo newspaper O País, citing an unnamed senior official in the company. These assets are centred on the Benga coal mine, in Tete province.

“We have logistics problems,” the official told the paper. “The mining operation [Benga] is currently losing money. But as it has coal reserves estimated at a billion tons, it is a strategic investment to apply $500-million in the next two or three years to solve these problems.” Benga currently produces 5-million tons of coal a year (Mt/y). ICVL intends to increase this to 12 Mt/y. But to do so, it will have to “construct more than 500 km of railway lines and port installations”.

ICVL is a “special purpose vehicle” created at the initiative of the Indian Ministry of Steel, with the purpose of obtaining metallurgical and thermal coal assets in foreign countries, in order to assure the supply of coal to India. The companies that are partners in ICVL are the Steel Authority of India Limited (SAIL), Coal of India Limited, Rashtriya Ispat Nigam Limited (RINL – a steel company), the National Mineral Development Corporation (NMDC) and NTPC (India’s largest power producer), all of them wholly or predominantly State-owned.

As a result of its deal with RTCM, ICVL now owns 65% of Benga. The other 35% is owned by Tata Steel, another Indian group, but a private sector business. A couple of months ago, the news agency Macauhub reported that SAIL would hold nearly half of ICVL’s equity in Benga – 48% to be precise – while RINL and NMDC would have 26% each. Initially, all the coal from Benga will go to RINL, as the NMDC is not yet making steel.

Separately, at the end of last month, the Macauhub news agency reported a statement by Mozambican Mineral Resources Minister Esperança Bias that government was going to sign eight new coal mining licences over the next two years. She was speaking at the 4th Annual Coal Conference in Maputo. Six of these projects would start operation “within 18 to 24 months,” she said. Bias noted that 1 773 mining titles had been awarded in the country, of which 124 were for coal, but currently only four coal mines were actually in operation.

She acknowledged that the country’s coal sector currently faced an unfavourable environment, because of the drop in coal prices in the international markets. Government, she assured, was working to reduce the transport and logistics costs in the country, in order to reduce the operational costs of the coal miners.

In addition, and to encourage the miners to also supply the local market, Bias announced a 50% reduction in royalties, from 3% to 1.5%, on coal that was sold to local customers for use inside the country. “We want to encourage the emergence of industries and the existence of coal allows us to develop the economy,” she affirmed. “[T]his reduction will be done so that there will be much more investment in industrialisation.”

According to the Mozambican news agency AIM, she also stated that one of the new mines would be an underground operation and that, between them, the six new operations would gradually increase the country’s coal production by between 10 Mt/y and 15 Mt/y. This could rise to 50 Mt/y once all the country’s logistical inadequacies and bottlenecks had been overcome. Regarding the domestic use of coal, she noted that there “[e]xist initiatives looking to use coal to generate electricity, transform coal into other products and we are going to continue to encourage these to become realities.”