Vale pushes ahead with Moatize Brendan Ryan | Mon, 07 Sep 2009 14:19 [miningmx.com] -- BRAZILIAN resource giant Vale has so far spent US$300m on development of the $1.3bn Moatize coal mine in Mozambique and expects to start production from it in late 2011.
Addressing the Coaltrans South Africa conference being held in Santdon, Vale GM finance Fabio Bechara said the initial box cut for the open cast mine would start in the second quarter of 2011.
He added the mine intended ramping up to its Phase One planned full output over a four year period between 2011 and 2015.
Full production from the Moatize mine in terms of Phase One is planned at 12.7 million tonnes (mt) annually of hard coking coal for export; 2.4mt/year of export thermal coal and 2.5mt/year of thermal coal to supply a local power station should one be built.
Bechara said initial earthworks and civil construction on the coal preparation plant were underway following completion of the detailed engineering studies which took place in the year to end-June.
He added some 3,500 workers were currently on site at the project while the relocation and resettlement of some 5,000 local people affected by the mine development was also underway.
Turning to the logistics of exporting the coal from Moatize, Bechara said planning was for the port of Beira to handle all the Phase One exports but that the port of Nacala would be required to handle export volumes above those levels.
Moatize is 575kms from Beira and the existing Sena/Beira railroad is being upgraded to handle the anticipated initial export levels.
Moatize - which is located near Tete in central Mozambique – is 1,000kms from Nacala. Access to Nacala is complicated because the railway line will have to cross neighbouring Malawi to reach the port situated in northern Mozambique.
Bechara commented, “The Nacala corridor is a very important solution for the future of the Moatize coalfield where we are not the only company planning to develop coal mines. The Sena/Beira line has limited capacity and we will need Nacala in the future.”
The rehabilitation of the Sena/Beira line had 150kms to go as of end-June and Bechara estimated it would be completed by the first quarter of 2010.
“We estimate the rehabilitated line will be able to transport between 6mt and 8mt of coal annually which is clearly not enough for our requirements and there are other potential coal producers in the Moatize region.
“There is a need to start discussions on the further upgrading of the Sena/Beira line to reach a total coal railage capacity of 18mt/year through additional investment. That will depend on the outcome of ‘take or pay’ contracts with the operators.”
Bechara was unable to specify how much capacity on the Beira/Sena line would be specificially allocated to meet Vale’s requirements against those of other coal exporters.
He said this would depend on the outcome of negotiations over coal railage contracts with the Mozambique government as well as practical issues like which coal company got into production first.
Asked about when developments might start on the Nacala corridor Bechara replied, “we would like see this start as soon as possible but this development is going to require a lot of agreements.
“The potential production from the Moatize coalfield is huge and developments will be influenced by the coal market.
“ I would think that in five years we would need to find a new solution. While capacity on the Sena/Beira line could be increased further above the 18mt/year level we would run into port capacity problems at Beira.”
Bechara said plans to build a coal-fired power station in the Moatize region were constrained by the availability of transmission lines to get the power to consumers elsewhere in Southern Africa.
“We have the capacity to produce far more than 2.5mt/year of coal for a local power station but that is the amount of coal needed by a station capable of generating 600MW annually which is all the current transmission infrastructure can handle.
“Anything over that is going to require a new transmission line.”
Cheers, Skip
RIV Price at posting:
$5.48 Sentiment: LT Buy Disclosure: Held
