Mozambique: Record Output in 2017 From Vale Coal Mine

Maputo — Vale-Mozambique, the Mozambican subsidiary of the Brazilian mining giant Vale, in 2017 produced a record amount of coal from its open cast mine in Moatize district, in the western province of Tete.

At a Maputo press conference on Thursday, the Vale-Mozambique Financial Director, Marcelo Tertuliano, announced that the company had produced 11.2 million tonnes of coal - 6.8 million tonnes of coking coal and 4.3 million ones of thermal coal. This doubled the 5.6 million tonnes produced in 2016. This increase was largely due to the completion of a second coal processing plant at Moatize.

Total revenue for the year was 97.3 billion meticais (about 1.6 billion US dollars, at current exchange rates), an increase of 122 per cent on the previous year. This was due partly to an increase in the export of Vale's coal, and partly to the exchange rate. The metical appreciated against the US dollar, from around 80 meticais to the dollar in October 2016, to 60 to the dollar for much of 2017. This had the effect of increasing the company's revenue when expressed in meticais.

Vale-Mozambique made a net profit of 66 billion meticais in 2017- but the company is running at an accumulated loss of 380 billion meticais.

The 2017 profits came in the first part of the year. In the fourth quarter it made a loss of 7.7 billion meticais, and, with increased operational costs, this rose to 8.6 billion meticais in the first quarter of 2018.

When the company's chairperson Mario Godoy was asked when he expected Vale-Mozambique to move definitively into profit, he declined to make any prediction, pointing out that many of the factors involved - notably the world market price of coal - are beyond Vale's control.

Tertuliano said the company's debt fell from 526 billion meticais in 2016 to 456 billion in 2017. But this is entirely an effect of the exchange rate: expressed in dollars, the debt rose (due to additional interest) from 7.3 to 7.8 billion dollars.

Vale-Mozambique's initial prediction for 2018 was total production of 16 million tonnes of coal. But the company suffered heavily from torrential rains in Tete province, and has now scaled back the forecast for this year's production to 15 million tonnes.

All Vale's exports are now using the new deep water mineral pot at Nacala-a-Velha on the northern cost. Vale funded this port and the railway running from Moatize to Nacala across southern Malawi.

Vale used to export coal from the central port of Beira, using the Sena railway. But its contract with the publicly owned port and rail company, CFM, to use the Sena line expired last year, and now its exports go exclusively from Nacala-a-Velha, which currently has the capacity to handle 18.5 million tonnes of coal a year.

The Moatize-Nacala railway is 912 kilometres long, and each coal train consists of 120 wagons (which can each carry 63 tonnes of coal), pulled by four locomotives. The round trip takes 103 hours.

Nacala bay is a natural deep water harbour that can take ships with a draught of up to 20 metres. Only the largest of supertankers have a greater draught. The port has facilities to store a million tonnes of coal, and its equipment can load ships at the rate of 5,100 tonnes an hour.

Vale claims that the Moatize coal is highly competitive and is winning clients away from other suppliers. Among its advantages are Mozambique's relative proximity to key markets such as India, Brazil and the Middle East.

Godoy recognised that, as a fuel, coal is in long term decline, as countries mothball coal-fired power stations and switch to alternative sources of energy. However, he believed that "the transition way from thermal coal will be lengthy".

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