Mozambique-based mining company Capitol Resources, a wholly owned subsidiary of London Stock Exchange Aim-listed Baobab Resources, is to invest $1-billion in the construction of a pig iron plant in the Moatize district of the south-east African country’s Tete province.

Company exploration manager Iain Plews pointed this out to the Mozambican newspaper Diário de Moçambique in Beira late last month.

“We believe that this project will significantly contribute to the development of Mozambique,” he said. Construction work is scheduled to start at the end of 2015 and the plant should start operations in 2016. It will have a production capacity of a million tons of pig iron a year. Ferrovanadium will be a by-product. While the plant will produce only pig iron during Phase 1, it is intended that later it will also produce steel.

The decision to go ahead with the project followed the confirmation, through exploration and prospecting, of an orebody of 750-million tons of iron-ore. The prospecting programme started in 2009 and involved the drilling of 150 bores over an area of 80 km2. The ore, the newspaper reported, lies from the surface to a depth of 200 m. Currently, 66 people are employed on the project, of which just two are expatriates. The development of the plant could create 500 jobs.

In an investor presentation on the project in London in December, Baobab Resources reported a Joint Ore Reserves Committee-compliant resource of 727-million tons that could provide the basis of a globally-competitive 1-million tons/year (Mt/y) to 4-Mt/y pig iron, ferro-vanadium and steel products operation that would have a life of more than 50 years. Assuming production of 1-Mt/y of pig iron, some 12 000 t/y of vanadium slag would also be produced, which could then be refined into about 3 000 t/y of ferro-vanadium alloy.

The orebody has grades of 36% iron and averages 100 m in thickness, increasing to 180 m in places. For the first 22 years of operation, the strip ratio will be 0.4, contributing to low production costs. The pig iron plant will use two 75 MW electric arc furnaces. Power could come from thermal coal, hydroelectric or even gas power plants, or a combination of any or all of these. Whatever option is chosen, the plant will need only 70 km of transmission line to connect with an electricity source.

The Moatize district already produces thermal and especially metallurgical (or coking) coal, essential for steelmaking. Baobab has already tested coal from the mining projects of Vale (Moatize), Rio Tinto (Benga) and Nippon Steel/Posco (Revuboè) and established that they suit the reduction process Baobab intends to use.

There is also a large limestone/ dolomite deposit that has been outlined by geological mapping and which lies some 5 km north-west of the iron ore-body and within Baobab’s concession. Limestone is, of course, used in steelmaking, to help remove impurities, in the form of slag.

Meanwhile, the Maputo newspaper ‘Notícias’ has reported that the company Moz Environmental, associated with South African enterprise Interwaste, has a project to develop a secure landfill in the Moatize district for waste – including toxic – materials and products produced by the local mining industry. The project is in line with the outcome of environmental studies and public consultations. It will allow sustainable and secure management of the waste products. The landfill has already been approved by the Mozambican government. It will occupy an area of some 20 ha and will be located about 8 km east of the town of Moatize.