[miningmx.com] – THE signs don’t look terribly convincing for Mozambique with Japan’s Nippon Steel & Sumitomo Metal Corporation the latest to voice reservations about its intention to invest in the southern Africa country.
Shinichi Fujiwara, a managing executive officer at Nippon Steel, told Reuters recently that without a lead investor with proven mining experience in the Revuboe metallurgical coal prospect, it may review its own position.
“At our core we are a steel company. If the majority owner does not have proper mining experience, this project loses its luster for us,’ Fujiwara is quoted to have said. Revuboe is the project from which Anglo American performed a neat volte-face declaring unmet conditions as an excuse for not investing its $555m share in the project’s equity.
Nippon Steel’s comments come just after being awarded approval to begin mining the prospect which is situated, like most of Mozambique’s best coking coal prospects, in Tete province.
The province is 500km from Beira and there isn’t much rail capacity from the prospective mines to Beira. Beira is constantly sandbanked, and requires continual dredging, although alternate ports are being built at Maputo (actually an expansion) and Nakala in the north of Mozambique.
Whereas there was exuberance in Mozambique two years ago, there is now doubt.
Said Xavier Prevost, a coal industry analyst for his own company XMP Consulting, in an interview with BDLive: “Being so small and the prospects of a sizeable increase being so remote, companies other than Vale – that has the lion’s share – are not going to develop their coal mine assets because although they could produce soon, they cannot sell their coal as they cannot rail to port’.
RBC Capital Markets commented in a recent report that it expected Rio Tinto to unveil fairly docile, uneventful first quarter production figures on April 16. But the Anglo-Australian group could give substance to speculation it intends to reverse out of Mozambique altogether having written down $3bn of its $4bn investment in its coking coal projects there.
According to reports, the world’s largest coal miner, Coal India, is considering buying the coal mines of Rio Tinto.
The report specifically identifies Rio’s Australian assets, but the Mozambique assets would be an interesting deal sweetener; afterall, Coal India has had little success in buying overseas coal mines since it bought two coal blocks in Tete province in 2009.
Over and above these concerns is a darker worry. In November, at a coal conference in Maputo Miningmx attended, Jaime Comiche, head of operations at Unido (United Nations Industrial Development Organisation) said Mozambique had failed to establish appropriate local economic development structures. “Critical mistakes’ in mine building had left “a bitter taste in the mouth’ of Mozambicans.
Earlier in 2012, some 700 families had protested against a resettlment managed by Vale. They had not been given sufficient access to water, power or land, they said.
As international companies re-assess their exposure to Mozambique, it seems local discontent is growing; the coking coal boom passed them by.
“They [the mining houses] have done some things . but the people are complaining; they are disappointed,’ Julio Calengo of Liga dos Direitos Humanos (Human Rights Leage) told a local newspaper.
Vicente Adriano, a teacher who has lived in Tete province’s Moatize most of his life, said the arrival of Vale in 2004 raised hopes the area would be uplifted.
“People here have always worked in the mines. Now they need specialised workers, but neither the government nor Vale has trained anyone here,’ he said. “There is no violence yet, but it is latent and can appear.’
