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Mozambique Mining: Vale intends to significantly increase its Moatize mine coal production

Vale Mozambique, the Vale group of Brazil’s subsidiary in the African country, has told the Mozambique media that it plans to produce 20-million tons a year (Mt/y) of coal by 2021. The information was released in Maputo by Vale Mozambique financial director Marcelo Tertuliano.

In its previously released production report for the year, the Vale group had reported that it had to reduce its production forecast for Mozambique coal for this year from 15 Mt to 12 Mt. Before that, in May, it had cut its 2018 prediction from 16 Mt to 15 Mt. That cut was the result of severe weather which had hit the production area.

Tertuliano told the local media that, in addition to increasing production, the Mozambique business needed “favourable market conditions” and a cost structure that ensured its sustainability. He pointed out that $6-billion had been invested in creating the conditions necessary to allow the company to mine coal in the country. An additional $2-billion would be required to 2021 to pay interest on loans (at the end of the first half of this year, Vale Mozambique had a debt of $7.9-billion).

Vale Mozambique mines coal at its Moatize operation in Mozambique’s inland province of Tete. The Vale group owns 81% of Vale Moçambique, Japanese group Mitsui holds 14% and Mozambican shareholders the remaining 5%.

 

The Moatize coal mine produces both metallurgical (or coking) and thermal coal, with the former as its primary product. Apart from minority shareholdings in a couple of joint ventures in China, it is currently the Vale group’s only coal operation.

During the first half of this year (1H18), total coal production at Moatize came to 5 303 000 t, which was 3.1% lower than in the first half of last year (1H17). Metallurgical coal production during 1H18 totalled 2 959 000 t, a decline of 19.6%, compared with 1H17. Regarding thermal coal, 1H18 output amounted to 2 344 000 t, which was 30.9% up on 1H17.

Total coal sales in 1H18 were just over 5 Mt, a 12% drop, compared with 1H17. Metallurgical coal sales came to 2 839 000 t, down 21% in relation to 1H17. Thermal coal sales amounted to 2 166 000 t, an increase of 3.4% over 1H17.

Vale Mozambique’s other major asset is the Nacala Logistics Corridor, which carries Moatize’s coal to the sea for export. This was developed by Vale, which originally owned 70% of the operation. Subsequently, half of this was also sold to Mitsui, so that today Vale and Mitsui each hold 35% and jointly control it.source: miningweekly.com/ by Rebecca Campbel

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