More Coking Coal Production Possible in Mozambique

Dec. 12, 2012 - PRLog -- UK-listed Eurasian Natural Resources Company (ENRC) is on course to produce 20Mtpa from its Estima operation, situated in the country’s Tete province. A mining permit application is in the works with production due in 2014.

Moreover, there’s the growing expectation that the group’s North Shore prospect could add a further 10Mtpa to production. Speaking at the Coaltrans Mozambique conference held in Maputo, Paul Craven, GM of ENRC Africa’s coal business, said the North Shore prospect had some 700Mt in resources from its northern and southern licences.

“I would be disappointed if it’s not 10Mtpa for 20 years,” Craven said of North Shore. This would add to the 1.3Bt in resources thought to exist at Estima.

“It’s very rough and ready; very early days,” said Craven when asked about the viability of North Shore. A prefeasibility on the prospect was expected by the first quarter of 2013.

Assuming the North Shore deposit was developed, which consists of several different prospects, ENRC’s planned output from Mozambique would increase to at least 30Mtpa, with the initial 20Mtpa coming from its Estima project where an application for an extraction permit had been lodged.

Craven said Estima would be ramped up over a three to four year period in line with infrastructure capacity, principally the ability of Mozambique to rail material to port. “North Shore will follow a year after Estima,” Craven said.

Another company with emergent production is Jindal Mozambique, a unit of Jindal Steel & Power, the Indian company. Vice president and country head for Jindal Mozambique, Manoj Gupta, said the firm’s Chirodzi coal project in the country’s Songo basin was due to begin its first shipments at the end of the calendar year.

“We have already started stocking coal,” said Gupta of the Chirodzi project which he estimated would cost US$180M. Initial output would be 1.5Mpta increasing to 10Mtpa in four years in line with the capacity of the wash plant.

Jindal Mozambique’s capital expenditure excludes infrastructure development, however. The Chirodzi project is some 100km from the Sena line which Mozambique logistics utility, CFM, is upgrading to 6.5Mtpa by year-end.

A doubling in the Sena line is due several years after that, but in the meantime, the route for Chirodzi’s coal is far from easy. There is a 130km road trip, a crossing over the Zambesi river via the Samora Michel bridge before reaching the Moatize loading area which has a current 3Mtpa capacity.

After that, the coal travels back over the Zambesi to Mutara loading area, and then on to Beira. Each link in the chain contains capacity limitations which hold back the ability of mine expansion.

Less imminent is production from the Minas de Revuboe development in which Anglo American, the UK-listed mining group, recently invested $555M.

Delays in securing a mining licence will push out the development until 2015 or later, Yasushi Aoki, GM for raw materials development at Nippon Steel & Sumitomo Metal Corporation told Reuters.

Japan recently concluded a development agreement with Mozambique’s government which could see the country supply up to 8% of Japan’s coking coal requirements. Aoki describes it as a masterplan for investment in the sector.

“Having the support of the Japanese government means we want to develop the project as soon as possible,” he said.

Nippon Steel & Sumitomo Metal has a 33% stake in the project while Anglo has bought 58.9% of the project. The remaining 7.8% of the project is owned by POSCO, the Korean steelmaker.

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