Moz coal operation again hit by rain, might have a local offtaker in three years

  • Aug 23, 2019
  • Mining Weekly

Vale Moçambique, the coal mining subsidiary of the major Brazilian mining group Vale, has announced that it has lowered its production forecast for this year from 14-million tons to 10-million tons. This information was released at a presentation in the Mozambique capital of Maputo, on its quarterly operational and financial results. The decrease in output is the result of the intense rains which affected the centre of the country.

The miner also reported that its revenues for the second quarter of this year (2Q19) had decreased, compared with revenue accrued during the first quarter (1Q19). The subsidiary’s 2Q19 revenues came to $271-million, which was $15-million less than the figure for 1Q19, despite the fact that the company’s actual production levels were slightly higher in 2Q19 than during 1Q19.

The company owns and operates the Moatize coal mine in the country’s western (inland) province of Tete. It is primarily a coking, or metallurgical, coal project, but also produces significant amounts of thermal coal. It is the Vale group’s only coal asset, apart from minority shareholdings in projects in China.

“The volume of sales was in line with the first quarter – we held back 2.2-million tons and we had an impact on revenues, because of the prices, which retreated in the second quarter, compared to the first,” said Vale Moçambique FD Marcelo Tertuliano. (Seaborne coking coal prices averaged $203.2/t in 2Q19, compared with $205.8/t in 1Q19. For thermal coal, the average Richards Bay free-on-board price was, at $65.9/t, 21% down on 2Q19, compared with 1Q19.) Because of this situation, the company foresaw a decline in the tax revenues it would provide the Mozambique State this year. However, it was optimistic about the next few years.

“[The year] 2019 has been a challenging year for the coal business,” observed the Vale group in its ‘Vale’s Performance in 2Q19’ report. “Despite some initiatives that resulted in better availability of mine equipment and an increase in tonnage moved, the lower RoM (run-of-mine) quality and mix gathered during the opening of new mine sections and higher maintenance at processing plants led to the review of the production guidance and the reassessment of mining plans. Reassessing mining plans in the second half of 2019 will be an important step to pave the way to improve the stability of the quality of the RoM that feeds the plants, thus achieving a higher sustainable ongoing level of production.”

Meanwhile, a project is being developed to build a 200 MW thermal power station at the port city of Nacala, in Cabo Delgado province, which currently suffers from a serious shortage of electricity, with a supply of only 42 MW. Nacala is now the main export port for the coal mined by Vale at Moatize.

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