Brazilian mining group Vale announced that production at its Moatize coal operation, in Mozambique, hit a new quarterly record during the second quarter of this year (2Q17). This was published in the miner’s recent report, ‘Vale Production in 2Q17’. The mine’s production during the past quarter was three-million tons (Mt). This figure was 24.8% up on output during the first quarter (1Q17) and a 101.8% jump on the equivalent period last year (2Q16). Moatize is now Vale’s only coal operation (although it has minority shares in two operations in China).

Of Moatize’s 2Q17 production, 66%, or 2 Mt, was metallurgical (or coking) coal. This figure was 25.6% higher than that for metallurgical coal in 1Q17 and 153.6% higher than for 2Q16. Thermal coal production in 2Q17 was 988 000 t, which was 23.2% up on 1Q17 and a 122.9% increase on the same period last year.

“The production record resulted from the successive monthly records of the two coal handling and preparation plants (CHPP1 and CHPP2),” stated the report. “CHPP2 continued its ramp-up consistently, increasing its production by 18%, compared with 1Q17, reaching a new monthly production record of 511 kt (thousand tons) in June, and pushing overall production to 1.1 Mt. Production increased for both metallurgical and thermal coal.”

Moatize is located in the landlocked western province of Tete, and the mine’s production has to be transported by rail to ports at the coast. “Logistics operations in Mozambique [also] reached all-time records, with railed volume reaching 3.1 Mt in 2Q17, 15% higher than in 1Q17.” The coal was taken down both the Sena line, to the port city of Beira, and the Nacala line, named after the harbour city it runs to. The volume of coal loaded on ships and exported during 2Q17 came to 3.1 Mt, a 19% increase on the 1Q17 number of 2.6 Mt.

Moatize’s financial performance was revealed in the miner’s other quarterly report, ‘Vale’s Performance in 2Q17’. The Mozambique mining operation achieved adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $157-million during 2Q17, which was a $96-million increase on the 1Q17 figure of $61-million. This was the result of increases in both prices and volumes sold. The adjusted Ebitda from the coal sold at Nacala came to $182-million, while sales at Beira had an adjusted Ebitda of minus $24-million.

“Net sales revenues of metallurgical coal increased to $414-million in 2Q17 from $254-million in 1Q17, as a result of higher sales prices ($74-million) and higher sales volumes ($85-million),” said the performance report. “Net sales revenues of thermal coal decreased to $67-million in 2Q17 from $70-million in 1Q17, mainly as a result of lower sales prices ($5-million). “The sales mix in 2Q17 was composed of 66% metallurgical coal and 34% thermal coal.”

The prices achieved for Moatize’s metallurgical coal came from a mixture of index lagged prices (79%) and fixed prices – trial cargoes and spot shipments – which contributed 21%. The prices for thermal coal were 95% derived from index prices and 5% from fixed prices.

“The metallurgical coal realised price increased 22% from $165.2/t in 1Q17 to $201.2/t in 2Q17, following the premium low vol[atile] hard coking coal free on-board Australia spot index, which increased 13%, from $168.2/t in 1Q17 to $190.3/t,” explained the report. “The realised price of thermal coal was $63.4/t in 2Q17, 7.0% lower than in 1Q17, and in line with the 7.8% reduction of the index in the period.”