Brazilian miner gets definitive exploration authorisation

By: Keith Campbell
6th July 2012
Mining Weekly
The Mozambique government has issued Brazilian mining major Vale with the definitive exploration rights for its Moatize coal operation.

The deed is officially entitled the Right of Land Use and Improvement (Direito de Uso e Aproveitamento de Terra – Duat).

Justice Vice Minister (and government spokesperson) Alberto Nkutumula explained that, in 2008, the Council of Ministers had issued a provisional Duat to Vale. That was the year that the miner started construction of the Moatize mine and its associated infrastructure. The intent was to issue a definitive Duat once the company – the world’s second-biggest miner in terms of market capitalisation – had fulfilled its exploration plan.

But the definitive Duat does not cover the same ground as the provisional one did. “It is Vale’s right to have a definitive Duat; however, there is a correction – the provisional Duat covered a part of the municipality of Moatize and the definitive deed now doesn’t cover this area,” explained Nkutumela. “[Vale] continues to have the right of use and improvement of land over the part which it has, excluding this [area]. The mining concession, because it also spreads towards the municipality of Moatize, will not be changed – we are altering only the Duat.”

The exclusion of the area of the municipality in the definitive Duat is the result of the conflict of interest between the expected growth of Moatize town and Vale’s coal exploration activities. The definitive Duat assigns Vale Mozambique an area of 22 096 ha in the administrative post of Moatize, district of Moatize, province of Tete, for coal exploration. The Moatize operation, which is Vale’s biggest coal project anywhere, is expected to complete its second phase of exploration in 2014.

Vale is to invest $2.07-billion until the second half of 2014 in order to develop and commission the second phase of production at the mine, which will increase its output by more than 11-million tons of coal. The would double the mine’s out- put to some 22-million tons a year (Mt/y). This will be made up of about 17 Mt/y of metallurgical coal and around 5 Mt/y of thermal coal.

Phase 1 of Moatize came into operation last year, having cost $1.66-million. It produced 620 000 t of coal last year and Phase 1 will have a production capacity of some 8.5 Mt/y of metallurgical coal and 2.5 Mt/y of thermal coal.

Vale plans to ship this coal to the coast down two railway lines – the Sena line to Beira and via Malawi’s Central East African Railways (CEAR) and thence down the Nacala line, in Mozambique, to the Port of Nacala. Vale, which is a major railway operator in Brazil, controls both the CEAR and the Nacala line (the miner holds 51% of the company which holds 51% of CEAR and the company which has the concession for the Nacala line).

To get Moatize coal to Nacala, Vale will both construct a new line in Malawi and upgrade the existing Malawi and Nacala lines. The miner is, however, also interested in using the CEAR and Nacala lines to export copper from Konkola North (50% owned by Vale), phosphates from Evate (another Vale project in Mozambique, some 65 km from Nacala) as well as other freight traffic between Zambia, Malawi and Mozambique.

Edited by: Martin Zhuwakinyu