[miningmx.com] — BRAZILIAN mining giant, Vale, said potential to share the Tete-to-Nakala railway line, crucial infrastructure that cuts across Malawi on its way to Mozambique’s undeveloped deepwater port, could be shared with other users.
Responding to questions at the Coaltrans Mozambique conference today in Maputo, Marcelo Matos, GM of marketing and sales for Vale’s coal division, said however there were conditions that would have to be negotiated.
Vale is the sole concession holder on the rehabilitation of the railway from the coal-rich Tete province, where its $2.5bn Moatize mine is situated to Nakala, a port in the north of Mozambique which is considered more suitable for heavy panamax vessels than the shallower Beira, or even the Matola terminal in Maputo. It is hoping the Nakala line can be rehabilitated and extended to take a capacity of some 18Mtpa, possibly by late 2014.
“The investment we’re making now [in the Tele to Nakala line] is for our expansion,” said Matos of plans by Vale to take the Moatize mine into a second phase expansion to 22 million tonnes/year (Mtpa) from first phase capacity of 11Mtpa. “But the future has to be negotiated,” he said, adding that the same was true of Vale’s entitlement at the Nakala port.
He later more cautiously added: “There are conditions in place with how we proceed”.
The question of use of infrastructure is fraught. In Australia, for instance, BHP Billiton and Rio Tinto long elbowed each other for use of rail infrastructure in the iron ore fields of Pilbara in western Australia.
In South Africa, it’s thought that Transnet SOC is increasingly working to have the major mining companies such as Anglo American and Xstrata, relinquish some rail capacity from Mpumalanga province to Richards Bay Coal Terminal in order to give greater access to export markets for junior mining firms.
Casimiro Francisco, chairman of the Mozambique Coal Development Association, and a non-executive of Riversdale Mining, the company purchased by Rio Tinto for its coal resources, said Mozambique wanted to install a framework where use of infrastructure was planned and broadened.
The stakes are high for Vale, however, which has sunk $2.5bn into Moatize, a coking and thermal coal operation that has just delivered its first coal to Beira, and has approved additional on-mine investment of $2bn for its expansion. In total, the expansion has been capitalised at about $6bn when infrastructure development is added in.
In addition to Vale, Rio Tinto and Beacon Hill Resources are just two companies developing mines in the Tete region which are also seeking access to infrastructure. “Our mine ramp-up is governed by access to infrastructure,” said Justin Lewis, chairman and CEO of Beacon Hill Resources, a UK-listed coal exploration and production company that owns the Minas Moatize coal project in Tete province.
Currently, Beacon Hill Resources is trucking about 500,000 tonnes annually by road to Beira but is hopeful plans to rehabilitate the Moatize to Beira railway line (called Sena) to some 6Mtpa by mid-2012 and 12Mtpa by end-2012 will be a success.
Asked to rate the timing risk associated with Sena, Lewis said: “You can never guarantee it, but I’m confident it can be done,” he said. “A year ago, we were saying the rail would never get built,” he added, suggesting Mozambique can progressed in the last year.
