Art & LifeSocietyMozambique's poor infrastructure slows coal exports

Tue,30Sep2014

Posted on Monday, 18 March 2013 17:12

Mozambique's poor infrastructure slows coal exports

By Pietro Musili and Nicholas Norbrook

Beira port is the main gateway for coal exports/Photo©GIANLUIGI GUERCIA/AFPBRIC countries need coking coal and Mozambique has it aplenty, but only a massive investment in the rail and port infrastructure will enable it to meet the demand.

 

Though massive gas discoveries will bring future riches, miners hope that coal will be king for today.

Indian, Brazilian and Chinese investors are keen to secure supplies for their respective countries' industrial transformations, especially the high-quality coking coal vital for steel-makers.

Activity is centred around Tete Province's two sub-basins of Moatize and Muchana-Vusi, with 4.2bn tn of estimated reserves.

With exports starting in 2012, the government predicts they will reach 40m tn per year in the next five years and eventually 100m tn per year.

Even if there were not question marks about coal price volatility cooling demand, mining majors will not hit these figures without continued investment in infrastructure.

Mozambique's civil war, which ended in 1992, did not spare the hard logistical structures necessary for the massive export of minerals.

DREDGING

Port capacity is a problem, despite improvements in recent years.

Emergency dredging has helped Beira port to regain its 8.5m draft, allowing ships with capacity of 60,000tn to berth.

But a lack of cranes, tractors, tugs and other port equipment is hampering operations, according to a study by the United States government aid agency USAID.

The newly established Beira port coal terminal should reach full capacity of 20m tn per year in 2015.

Built at a cost of $200m and inaugurated in June 2012, it currently transports 6m tn per year.

Brazil's Vale and Australia's Riversdale signed an agreement for the port giving Vale 68 percent of capacity and Riversdale 32 percent.

Railway infrastructure also lags behind the optimism.

In September, Vale shipped 95 trainloads of coal, each with 40 wagons carrying 63tn from Tete to Beira port down the Sena line.

This is the highest volume so far, but was only 240,000tn, equivalent to a rate of 3m tn per year and far short of the hoped-for capacity.

A statement from Portos e Caminhos de Ferro de Moçambique (CFM) in June 2012 claimed that its Sena line upgrades were on track: "This is the first phase of a rehabilitation of this infrastructure to be undertaken by CFM to ensure that the line is able to carry 12m tn per year by 2013 and 20m tn within three years."

The Benga mine is a joint venture between Anglo-Australian company Rio Tinto (65 percent) and India's Tata Steel (35 percent).

It exported its first shipment of hard coking coal in June 2012. Rio is working on the Sena line alongside the government.

Meanwhile, Vale is progressing with the construction of the railway for the Nacala corridor that will bring coal from Tete Province to the port of Nacala, which can take larger bulk carriers.

The railway passes through Malawi, and contractors have begun construction of Vale's coal terminal at Nacala.

GOING FOR GOLD

Despite the huge discoveries of coal that are set to be an engine of economic growth for the country, most of the acreage of Mozambique is still unexplored.

While the government has granted 110 licences to 45 companies in Tete Province, it recently awarded148 prospection licencesinNiassa Province on the border with Tanzania, where miners hope for gold and diamond finds.

The government is discussing a new mining law in parliament.

The draft drawn up by the ministry of natural resources' mining department shortens the time requirements for exploration and licences.

It also includes new rules for transferring mining titles and rights.

It is unclear if and how the new law will affect the tax regime.

What is certain is that the government is now imposing new minority stakeholders on projects, including 10 percent participation for the country's private-sector players in mining ventures●

 



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