JOHANNESBURG (miningweekly.com) − In a move to gain exposure to the strong seaborne thermal coal market, Australia’s Riversdale Mining has entered into an offtake agreement with commodities trader Trafigura for thermal coal produced from the Benga coal mine, in Mozambique, the ASX-listed miner reported on Friday.
The Benga project in Tete is a joint venture between Riversdale, in which Rio Tinto secured a 73.39% shareholding, and Tata Steel.
The take-or-pay agreement covers all thermal coal produced from the Benga coal mine during stage one of the mine’s development and is valued at over $200-million at forecast thermal coal prices.
The project would be developed in three stages, contemplated to align with the completion and subsequent expansion of rail, port and river barging infrastructure in Mozambique. The initial stage-one development at 5.3-million run-of-mine tons a year, would produce about 1.7-million tons a year of high-quality hard coking coal, and 300 000 t/y of export thermal coal.
The Benga thermal coal price would be linked to the API 4 Index, the benchmark price reference for coal exported out of South Africa’s Richards Bay Coal Terminal. The agreement included options to increase offtake tonnages as production ramped up at Benga.
Riversdale MD Steve Mallyon said that the offtake agreement would be a significant profit driver for the mine during the project’s first stage of development.
The agreement assisted in underwriting the critical first stage of growth and production at Benga, he added.
“Riversdale Mining is also pleased to have secured a strong offtake partner in Trafigura, as they are one of the stronger and more experienced global trading companies, with access to in excess of $30-billion in credit facilities, and with investments in industrial assets around the world of more than $2.4 billion,” Mallyon said.
Trafigura was fast becoming a world-class supplier of thermal coal, coking coal and coke products to the global marketplace, and is part of a trading business that includes the world’s third-largest independent oil trader and the second largest independent trader in the nonferrous concentrates market.
Diversified giant Rio Tinto’s extended A$16.50-a-share takeover offer for Riversdale Mining is set to close on June 17. The diversified miner recently took control of the company, replacing its board with Rio-appointed members.
Edited by: Creamer Media Reporter
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