Mozambique Mining: Vale Coal production hit by bad weather

 

Vale - fabio-schvartsman-klabin-vai-para-vale
Fabio Schvartsman, VALE CEO

Brazilian mining major Vale is maintaining its guidance that its Moatize operation, in the Tete province of Mozambique, will reach a production rate of 18-million tons (Mt) next year. It gave this assurance in its recently published report ‘Vale’s production and sales in 1Q18’. (1Q18 refers to the first quarter of 2018.)

 

However, the production guidance for 2018 has been reviewed as a result of adverse weather and other factors, and is now forecast to be some 15-Mt for this year. Moatize is now the only coal operation owned by the group.

Moatize’s total coal production was 2.432-Mt during 1Q18, down 5.6%, compared with 4Q17 (which saw 2.576 Mt produced). The 1Q18 figure was almost the same as that for 1Q17, being only 0.1% down on the output achieved in the first quarter of last year.

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“[S]evere weather conditions during March resulted in power plant outages and in five flooded production pits, with the situation normalised during the latter half of the month,” stated the report. “Additionally, production in 1Q18 was impacted by the mobilisation of the workforce to [restore] operations to normal levels following the labour action in December 2017.”

Moatize produces both metallurgical and thermal coal (metallurgical coal is its primary product). During 1Q18, production to metallurgical coal totalled 1.401 Mt, which was 1.3% less than the 1.419 Mt produced in 4Q17 and 14.2% down on the output of 1.632 Mt in 1Q17. Thermal coal production in 1Q18 was 1.031 Mt, which was 10.9% below the 1.157 Mt of 4Q17 but a 28.6% jump compared with the 802 000 t of 1Q17. “Production in 2Q18 is expected to increase considerably, compared with 1Q18, with the expansion of mining areas,” said Vale in its report.

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Regarding sales, total coal sales came to 2.497 Mt in 1Q18, which was 15.2% less than the 2.943 Mt achieved in 4Q17 and 2.8% down on the sales of 2.568 Mt in 1Q17. Metallurgical coal sales in 1Q18 totalled 1.432 Mt, 16.5% below the 1.715 Mt figure for 4Q17 and 6.8% less than the 1.537 Mt of 1Q17. Sales of thermal coal during the first quarter came to 1.065 Mt, 13.3% down on the 1.228 Mt reached in the fourth quarter of last year, but up 3.3% on the 1.031 Mt achieved during 1Q17. The production report contains no specific comments about coal sales.

Vale’s main route for transporting the coal from Moatize to the coast for export is now the Nacala Logistics Corridor, a railway line that runs from Tete, through Malawi, to the Mozambique coastal city of Nacala. Vale developed this route and originally held a 70% share in it, which the miner reduced to 35% by selling half its stake to Japanese group Mitsui.

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