London — The Brazilian mining giant Vale on Tuesday announced that it will close down its coal mine in Moatize, in the western Mozambican province of Tete, for three months next year for "maintenance".
In August, the Mozambican subsidiary of Vale announced that in the second quarter of 2019 it registered an operational loss of 145 million US dollars, which followed a 120 million dollar loss in the first quarter.
As a result of these continuing losses, the company has undertaken a review and is shifting its focus away from mining thermal coal to coking coal used in the production of steel. The price of thermal coal has been falling, in large part due to international electricity companies moving away from coal generated power to renewable energy or gas powered generation which has lower carbon emissions and is less polluting.
Vale's partner in the mine and the Nacala Corridor railway and port project, has confirmed that it expects to take a financial hit. Japan's Mitsui announced on Wednesday that "while Mitsui is now reviewing the amount of proven reserves based on the new long-term mining plan for the Moatize project, we hereby inform that recognition of impairment loss for the Moatize business is expected'.
The closure of the mine will also have a negative effect on Mozambique's balance of payments: in the second quarter of this year Vale-Mozambique's revenue was 271 million dollars. In addition, the company paid 3.6 million dollars in royalties to the Mozambican state.
Alongside Vale and Mitsui, the state-owned Mozambican Mining Exploration Company (EMEM) holds a five per cent stake in the Moatize project.