The Mozambique government is creating the framework which will allow mining companies to transport their coal from the Moatize basin in the province of Tete to the coast. This assurance was given last week by Transport and Communications Minister Carlos Mesquita. He was responding to complaints from miners that the lack of transport capacity from Tete to the coast was one of the biggest barriers to the development of their businesses, Mozambican news agency AIM reported.
He was visiting facilities of the State-owned national ports and railways company, Portos e Caminhos de Ferro de Moçambique (CFM). (CFM is often a minority shareholder in railways and ports that the country has concessioned.) He highlighted that the capacity expansion programme for the Sena railway from Tete to the port city of Beira was almost finished. He affirmed that the government was doing its part and was meeting with the active mining companies, although Mozambique could not “be blamed for the fact that the world coal price is falling”.
The newspaper O País further reported that Mesquita said that the proposed railway line from the Moatize district to the port of Macuse was awaiting financing before proceeding. “It is now a process of mobilising finance, to be followed by the physical work to build the project,” he stated. “When all the conditions were properly aligned, then construction will start.” The proposed Moatize–Macuse line was approved in principle by government in December 2013. It will run for 525 km. Macuse is in Zambézia province, north-east of the provincial capital, the port city of Quelimane. A coal export terminal will also have to be built at Macuse. The Minister further challenged the CFM board to create more transport infrastructure in the north of the country, to support the emerging oil and gas sector there.
Quite separately, the Indian State-owned miner Coal India was probably going to end its project in Mozambique, The Economic Times newspaper has reported. This was the company’s first overseas project and involved two exploration blocks (designated A1 and A2) in Tete province. Neither block had previously been explored. The company set up a local subsidiary, Coal India Africana, to oversee its activities in the African country. Almost two years were spent exploring the two blocks, at a cost of almost Rs5-billion (about $80.5-million). Samples were sent to India for analysis.
The exploration programme had been delayed by about a year because the company had to cancel exploration tenders twice, for technical reasons. This, and other delays, forced Coal India to renew its exploration licence.
The original hope had been that production would start by 2014 and the expectation was that 20% of the coal found would be of metallurgical quality and the rest would be thermal coal. The results, it seems, have not remotely matched these hopes. “The reserves in the two blocks do contain carbon, but it is not good enough to be called coal,” an unnamed company executive told the newspaper (he was speaking on condition of anonymity). “This reserve cannot sustain a 12% rate of return on investment in the medium to long run. Simply put, it is not coal.” Not even Indian power plants, which can operate on the lowest grades of coal, would be able to use it.
Coal India is, however, a shareholder in another State-owned company, International Coal Ventures Limited. This is now the owner and operator of the Benga mine in the Moatize district, which was acquired from Rio Tinto last year, reportedly for $50-million – only one-eightieth of the price Rio Tinto originally paid for it.