Riversdale appoints mining contractor for Mozambique coal project

14th April 2010 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Australian coal-miner Riversdale Mining has officially opened its Benga coal project, in Mozambique, and has appointed a mining contractor for the development of the first stage of mine.

The company would invest A$270-million on the stage-one development, which would produce 1,7-million tons a year of hard coking coal, and 0,3-million tons a year of thermal coal for the export market.

The total mine development expenditure would reach the A$1-billion mark, said Riversdale, which is developing the project in a joint venture with Tata Steel, in a statement.

Riversdale also said that it had signed a deal with MCC Contracts, a subsidiary of South Africa's Eqstra Holdings, as the openpit mining contractor at Benga.

Eqstra commented in a statement that the diversification into coal mining was part of its strategy to reduce the group's exposure to platinum, as well as South African concentration risk.

The Benga project is Riversdale’s first mine in Mozambique and will create 4 500 direct and indirect jobs over the next five years. Chairperson Michael O'Keeffe said that the Benga mine would be one of the most significant foreign direct investment projects in Mozambique.

The country's President, Emilio Guebuza, and senior government and industry representatives and attended the formal 'ground-breaking ceremony' on Tuesday.

Riversdale said that it believed the scale of the resource at Benga would allow for cost-effective opencut mining, with the potential to produce 20-million tons of run-of-mine coal a year, over at least 25 years.

The first coal shipment from Benga will take place in 2011.

The company is also planning a power station project near Benga.

Riversdale currently holds a dominant landholding position in the emerging coal regions of Mozambique. The company has 21 exploration licences, covering over 250 000 ha adjacent to infrastructure, including the City of Tete, power, water, sealed roads, rail, an international airport and direct access to the Zambezi river.

The Benga licence represents less than 8% of Riversdale’s total holdings, the company said.

The neighbouring Zambeze project also has large quantities of coal, which also includes hard coking coal and thermal coal.