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Moz coal sector under strain as country looks to cooperation with Botswana

3rd June 2016

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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It is reported from Mozambique that three of the companies producing coal in that country have stopped, or significantly scaled back, their mining activities. According to the Maputo daily Notícias, the companies are the Indian groups International Coal Ventures Limited (ICVL) and Jindal Africa, and British miner Beacon Hill Resources. Indian State-owned ICVL operates the Benga mine, Jindal Africa (part of the Jindal Steel and Power group) has the Chirodzi mine, while Beacon Hill has Minas de Moatize. All three mines are in Mozambique’s coal-rich Tete province.

Tete Provincial Minerals and Energy director Grácio Rosário was quoted by the newspaper as saying that Jindal Africa had almost totally stopped mining and was only continuing with the processing and exporting of its stockpile and with the necessary administrative services. The fundamental reason for the downscaling of these operations is the fall in coal prices. (However, Beacon Hill Resources failed last year and the Mozambique subsidi- ary was put up for sale, and there has been little information since, so the halting of operations at Minas de Moatize may be connected with Beacon Hill’s collapse.) Hundreds of jobs have been lost. “All the mining companies are confronting the same difficulties, resulting in Vale, for example, reducing its production,” he pointed out. (Brazilian miner Vale has developed the biggest coal mine in the country, Moatize.)

Meanwhile, separately, and looking to the future, Mozambique and Botswana have signed a geology and mining agreement that will give the former access to the latter’s expertise in these areas. The agreement was signed on the first day of the recent three-day State visit to Mozambique by Botswana President Ian Khama. “Botswana is a power in this area [of mining and geology] and Mozambique wants to learn from it,” explained Mozambique Foreign Affairs and Cooperation Minister Oldemiro Baloi. He noted that his country was one with “a lot of potential in the area of natural resources”. The Minister did not give any details about the agreement.

Industry, mainly mining, accounted for 32.9% of Botswana’s gross domestic product (GDP) last year. Diamond mining alone was responsible for about 25% of GDP, 33% of government revenues and 85% of export earnings. But Botswana also mines coal and nickel, and has resources of copper, silver and gold (although the country’s copper mining sector has been hit hard by the downturn in global prices). On the back of diamonds, with sound economic and financial management, Botswana has maintained one of the highest GDP growth rates in the world since it became independent in 1966. GDP, in purchasing power parity (PPP) terms, was estimated at $37.05-billion last year and, with a population of just over two-million, this results in a per capita PPP GDP at $17 700, making the country an upper-middle-income State. Mozambique, a country of a little more than 25-million, had a PPP GDP last year estimated at $33.73-billion and a per capita PPP GDP of just $1 300.

The two countries also want to reinforce their bilateral relations in the areas of energy and transport. “[T]he ambition is to strengthen cooperation,” affirmed Baloi. Botswana is especially interested in improving the transport links between the two countries. “Botswana is a landlocked country and it is in our interest to take advantage of the geographical location of Mozambique to have access to the sea,” stated Botswana Minister in the Presidency for Social Affairs and Public Administration Eric Molale.

In particular, Botswana wants to reactivate the Techobanine harbour project. This was originally agreed to by the two countries in 2010 and was intended to provide Botswana with a route to the sea to allow it to export coal. Techobanine is currently a coastal village in the Matutine district of Maputo province, some 70 km south of Maputo city and only about 20 km north of the South African border. A deep-water port could be constructed there. The project would include the construction of railway lines to link Botswana with the proposed new port; the route would run through Zimbabwe. In 2010 reports about the project, it was stated that the rail link from Botswana’s coalfields in the east of the country to Techobanine would require the construction of 1 100 km of track. Current reports state that the railway will be some 2 000 km long, although this might include refurbished existing tracks not mentioned in the 2010 reports.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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