27 February 2013

Mozambique: 2012 Coal Production Highest Ever

Maputo — Mozambique’s Minister of Mineral Resources, Esperanca Bias, announced in Maputo on Wednesday that the country produced 4.9 million tonnes of coal in 2012, which is a record in the history of Mozambican mining.

Speaking at the opening of a seminar on the management of revenue and the optimization of benefits from coal and natural gas, Bias said that to date the Mozambican government has signed four coal concession contracts. Three companies are extracting and exporting coal – the Anglo-Australian Rio Tinto, Vale of Brazil, and, on a much smaller scale the London-based Beacon Hill Resources.

Coal was discovered in the Moatize coal basin during the colonial period, but the Portuguese carried out no thorough geological survey. The small, underground Moatize mines were nationalized in 1979, after a mining disaster, and a state company, Carbomoc, was set up to run the mines.

When the Sena railway line from Moatize to the port of Beira was comprehensively sabotaged by the apartheid backed Renamo rebels in 1983, it became impossible to export the Moatize coal, except for small amounts trucked into Malawi and Zimbabwe.

The coal industry began to revive with the first concession contract, signed with Vale in 2004. With the reconstruction of the Sena line, large scale coal exports via Beira once again became possible. The coal seams in Moatize are near the surface, and so both Vale and Rio Tinto opted for open cast rather than underground mining.

Bias told the seminar that the number of contracts with coal mining companies will shortly increase, and she was optimistic that by 2020 that country will be mining 50 million tonnes of coking and thermal coal a year.

Mozambique, she added, could become one of the world’s five largest exporters of coking coal.

Bias said that over the past five years more than five billion US dollars has been invested in Mozambican coal. As a result of the exploration, the country’s coal reserves are estimated at more than 20 billion tonnes. The largest known reserves are in Tete province, particularly in the Moatize basin, but there are also coal fields in Manica and Niassa.

Bias recognised that the main obstacle facing the mining industry is the lack of transport infrastructure. This was shown earlier this month when torrential rains and flooding in the Tete district of Mutarara washed away the ballast and earthworks on part of the Sena line, leaving the tracks dangling in mid-air, and forcing a halt to all rail traffic.

Bias said the government is working with the mining companies and other private bodies to identify alternative solutions for moving the coal through public-private partnerships.

Vale is pushing ahead with a new railway from Moatize, across southern Malawi, and linking up with Mozambique’s existing northern line to the port of Nacala. There are also ideas for new ports in Zambezia province, and new railways linking them to Moatize.

As for natural gas, Bias recalled that in 2004 Mozambique began to treat and export gas from the Pande and Temane fields in the southern province of Inhambane. The treatment plant and gas pipeline are owned by the South African petro-chemical giant, Sasol.

The Inhambane gas alone made Mozambique the largest producer of gas in southern Africa.

“Domestic consumption of natural gas has been increasing in southern Mozambique, notably for the generation of electricity, and for consumption in industry as a fuel”, Bias said.

Since 2010, much larger discoveries of gas have been made in the Rovuma Basin, off the coast of the northern province of Cabo Delgado. So far the estimated gas reserves in the Rovuma basin are in excess of 150 trillion cubic feet.

“The essential objective of the government”, said Bias, “is that the use of our natural resources should be a determinant factor in the creation of new jobs, directly and indirectly”. She stressed the need for business linkages to ensure an increase in local content in the goods and services provided to mining and hydrocarbon companies.

She wanted to see new small and medium enterprises spring up alongside the mining mega-projects which would drive sustainable socio-economic development.

The training of skilled Mozambican labour was another government priority, involving upgrading existing educational institutions and creating new ones.

The two day seminar is intended to present, to the Mozambican government and to participants from other parts of the world, examples of good practices and lessons learnt in managing revenues derived from natural resources.

The event is co-organised by the African Development Bank (ADB), and ADB southern region director Chiji Ojukwu stressed the importance of good management of natural resources, and the need to integrate them into the country’s development agenda.

“The idea is for better mobilization of natural resources for the sustainable and inclusive socio-economic development of the country”, he said.

Coal and natural gas, when properly managed, he added, can be interlinked with other sectors of the economy, with a major influence on medium and long term growth

The discovery of large reserves, he said, “will drive a new inflow of capital, particularly in the form of foreign direct investment and international bank loans”.

The extraction and export of coal and hydrocarbons would then necessarily lead to the development of major development infrastructures, including ports, roads and electricity networks, which in turn would create more jobs and more revenue.

Copyright © 2013 Agencia de Informacao de Mocambique. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.