The Moatize coal mine, in the Tete province of Mozambique, set a new quarterly production record during the first quarter of this year (1Q17), pushed by two monthly production records, set in January and March. Moatize is owned and operated by Vale Mozambique, the local, predominantly owned subsidiary of Brazilian major mining group Vale. (Vale Mozambique is 80%-owned by Vale, 15% by Japanese group Mitsui and 5% by the Mozambique government.)

Production for 1Q17 came to 2.4-million tons (Mt), the group reported, while output during January amounted to 0.8 Mt and, in March, to 0.9 Mt. However, the amount of coal railed to the coast from the mine during the first quarter was actually higher, at 2.7 Mt; this was a 12.5% increase over the figure of 2.4 Mt railed during the fourth quarter of last year (4Q16). The quantity of Moatize coal loaded onto ships and exported from Mozambique in 1Q17 totalled 2.6 Mt, a jump of 24% over the 2.1 Mt shipped during 4Q16.

Coal from Moatize is either railed down the Sena line to the Port of Beira or carried by the Nacala line to the Port of Nacala. (The Nacala route is formally called the Nacala Logistics Corridor (NLC); this is now owned 35% by Vale and 35% by Mitsui, while Mozambique’s Ports & Railways Company – better known as CFM – and others hold the remaining 30%.)

With Vale’s exit from coal mining in Australia following the disposal of the Carborough Downs operation in November, Moatize now almost totally dominates the group’s coal production. Vale still has a 25% share in two opencast coal mines in China, at Yongchen, in Henan province; these supply the Chinese domestic market.

“Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the operations in Mozambique decreased to $65-million from the $142-million in 4Q16,” stated Vale’s report, ‘Vale’s Performance in 1Q17’. “The decrease of $77-million vs 4Q16 was mainly driven by the . . . impact of lower prices, which were partially offset by higher volumes . . . Production cost per ton of coal shipped through the Nacala port decreased 14% to $83.9/t in 1Q17 from $97.8/t in 4Q16, owing to the ramp-ups of Moatize [Phase] II and the NLC, as well as the reestablishment of the supply of explosives, which affected production in 4Q16.”

The adjusted Ebitda of Vale’s total coal business came to $61-million during the first quarter. This was significantly ($95- million) lower than the 4Q16 figure of $156-million. The decrease was largely the result of lower sales prices. Even so, the 1Q17 results mark two consecutive quarters in which the group’s coal operations recorded positive Ebitda results.

Moatize produces mainly metallurgical or coking coal, but the mine also produces thermal coal. Its metallurgical coal output is divided into two categories or grades: Chipanga hard coking coal (HCC) and the recently launched Moatize Low Volatile HCC.