Mozambique Mining: Increased Moatize output reinforces coal’s role as the engine of the economy

coal Mocambique_releaseThe Economist Intelligence Unit (EIU) today considered that the increase in coal production at the Moatize mine reinforces the conviction that the raw material is the main driver of Mozambique’s economic growth.

“The latest production figures reinforce our view that coal is the main driver of Mozambique’s economic growth,” write the experts of the economic analysis unit of the British magazine The Economist.

In an analysis of coal production in Mozambique, which was sent to investors and to which Lusa had access, analysts say that “the accumulated production up to the third quarter in Moatize shows a growth of 38.8% compared to the first nine months of 2016 and an increase of 5.8% over the third quarter of last year, and indicates that strong growth in coal exports in the first half of 2017 continued through September. ”

On October 19, Brazilian miner Vale announced that coal production in Mozambique reached a quarterly record of 3.2 million tonnes in the third quarter of the year and that its logistics operations in Mozambique reached a record of transported volume, reaching 3.5 million tonnes in the third quarter, 15% more than in the previous three months.

“Moatize is technically capable of producing 22 million tonnes per year, which would mark a significant increase compared to the 12 million that Vale expects to produce in 2017,” write the Economist analysts, however, raising doubts about obtaining of this value.

“Although we doubt that the annual production of 22 million tonnes will be achieved in the medium term, we expect a considerable growth in the coming years, which means that there will be a substantial increase in export revenues in a country facing economic difficulties,” they said.

Production capacity, however, faces difficulties on the part of investors, who are reluctant to move to new projects in the medium term.

“Prospective miners are constrained by transportation difficulties from Tete province to the coast and lower prices in the medium term, which are expected to fall from $ 82 per tonne this year to $ 70 per tonne between 2018 and 2020,” EIU says.

Investors “should also be conditioned by failing media ventures,” such as Rio Tinto’s bet, which bought assets for $ 3.7 billion in 2011 and eventually sold them for $ 50 million, and is now facing a lawsuit for having “allegedly misled the shareholders in this disastrous business in Mozambique.” source: Lusa

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