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Moatize coal operation awaits new infrastructure to achieve full capacity

7th March 2014

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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Brazilian mining major Vale’s Moatize coal operation in the Tete province of Mozambique remains constrained by logistical inadequacies, although its output was slightly higher in 2013 than in 2012. However, the miner remains confident about the future of the mine. “Moatize is being developed to be a large-scale, low- cost, integrated met[allurgical] coal operation,” it stated in its recently published report, ‘Vale’s Performance in 2013’.

Moreover, thanks in part to the continued, albeit slowed down, ramp-up at Moatize, but primarily as a result of a good operational performance by its Carborough Downs mine, in Australia, the group achieved a new coal production record of 8.8-million tons last year. This was 23.7% higher than in 2012. However, this was 3.6-million tons below Vale’s guidance for its 2013 coal output. It also made record coal sales of 8.1-million tons last year.

“The ramp-up of the first phase of the Moatize coal project is being temporarily restricted by the existing limitations of the logistics infrastructure – railway and port – which do not allow for total use of the mine nominal capacity of 11 Mtpy (million tons per year),” reported Vale in its recently released ‘2013 and 4Q13 Production Report’ (published at the same time as the performance report). “Additionally, the lack of availability of explosives constrained blasting operations and impacted on production volumes. The conclusion of the Nacala corridor project will eliminate this logistics bottleneck. “Availability of explosives on site has been fully restored.”

Moatize is mainly focused on the production of metallurgical coal, mainly for the steel industry, especially in Asia, but it does also produce thermal coal. In 2012, the mine’s output of metallurgical coal was 2 501 000 t, but this declined by 5.1% in 2013 to 2 373 000 t, owing to these problems. (In sharp contrast, Carborough Downs’ production of metallurgical coal rocketed by 168.6% over the same period, to 2 447 000 t.)
However, Moatize’s ther- mal coal output in 2013, at 1 444 000 t, was 14% higher than the 2012 output of 1 267 000 t. Total Moatize coal production last year was 3 816 000 t.

The impact of the explosives shortage is evidenced by the fact that Moatize’s metallurgical coal production was 706 000 t in the third quarter of last year but dropped 43.2% to 401 000 t during the fourth quarter. The respective figures for thermal coal were 462 000 t and 277 000 t, a decline of 40%.

Nevertheless, Vale is driving on with the development of Phase 2 of Moatize. This will double Moatize’s total output to 22 Mtpy. The project involves the excavation of a new pit, the duplication of the Moatize coal handling processing plant (CHPP) and the construction of all the related infrastructure. Total capital expenditure for Phase 2 is estimated at $2.068-billion, of which $839-million has been spent so far, with $383-million having been spent last year. The earthworks have been completed. The civil works are under way, with the concrete foundations for the CHPP, the primary crusher and heavy-duty vehicles area “well advanced”. The physical progress is reported to be 53% and Phase 2 should start operations during the second half of next year.

What makes Moatize Phase 2 possible is the Nacala corridor project. This involves the development of the railway link from Moatize, via Malawi, to the Mozambique port of Nacala, and of the requisite harbour infrastructure there. This will complement the existing Sena railway, which runs from Tete/Moatize to the harbour city of Beira, but which currently lacks capacity.

“The [Nacala] port and railway reached 42% and 40% physical progress in 2013 respectively,” noted Vale in its production report. “The greenfield sections within Mozambique and Malawi, which will enable the connection between the Moatize mine and the Nacala port, achieved 56% physical progress and the first train is expected to be running by the end of 2014 with a rail capacity of 11 Mtpy. Revamping of the existing railway sections will extend up to 2016, increasing capacity up to 18 Mtpy.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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