Mining Weekly

The Mozambique government would like to look at the prospecting data collected by Rio Tinto Coal Mozambique (RTCM) at its Benga licence areas in the country’s Tete province. This data, RTCM reported, resulted in “a downward revision of the estimates of the recoverable volume of metallurgical coal in the mining areas . . . and also a re-evaluation of the scale that the turn- over can reach”.
“We hope that they give us the tech- nical data on these assertions so that we can verify them,” Mineral Resources Vice Minister Abdul Razak told Portuguese news agency Lusa. But this is “a normal situation in geology, where this happens many times”.
Separately, Mineral Resources Depart- ment deputy national director Obete Matine told the Bloomberg news agency: “We are not distrusting the [RTCM] studies, but we have to see all the details and, after that, we can probably see what we can do to help the project.”
RTCM also complained of inadequate infrastructure to transport the coal to the coast. Originally, RTCM planned to ship the coal on barges down the Zambezi river, but this did not win the necessary government approvals. There were reportedly also problems with dredging the river.
“The Mozambique government is working with the companies so that the transport capacity increases in the short and medium terms,” assured Razak. “It is clear that there are no immediate answers, but, in the future, we will have answers for the flow of coal and other products, either by the Sena line or the Nacala [line], or by other railway lines whose construction is foreseen.”
Matine affirmed that Mozambique would not favour particular companies but would seek to benefit the entire mining sector. “We have to look for global solutions for all players.”
The combination of the reduction in exploitable reserves and the transport problems “resulted in a reduction of the book value of Rio Tinto Coal Mozambique and was recorded as an impairment in the accounts of Rio Tinto”, stated the company. The impairment totalled $3-billion. The Benga project was acquired from Australian junior Riversdale Mining in 2011 for $4.1-billion. The asset is now valued, by Deutsche Bank, at $370-million.
Meanwhile, the Bloomberg news agency has also reported that the Rio Tinto group is considering selling part or all of RTCM. The group is apparently carrying out a review of its Mozambique business, looking into transport options and the possibility of creating joint ventures (JVs) or selling the entire operation. The news agency says there is no timetable for the conclusion of the study. Cooperation could be focused on the coal export infrastructure – railways and ports.
RTCM started exporting coal from Benga in June last year, but railway capacity is very limited. A recent official Mozambique report revealed that the Sena railway from Tete to the Port of Beira currently has a capacity of only 3 Mt/y to 4 Mt/y, and is running at full capacity. (The line is being upgraded again, which will double its capacity.)