Poor infrastructure dims the glow of Mozambican coal exports

Logistics challenges in central Mozambique are forcing mining companies to rethink their plans for the region. First off is mining giant Rio Tinto which is reviewing its coking coal mine project in the Tete Province. The company has written down $3 billion (R26.6bn) on the mine asset, which was purchased in 2011 for R36.4 bn from Riversdale Mining of Australia. Rio Tinto was quoted as saying the development of infrastructure to support coal mining was more challenging than originally anticipated. Around 112 licences have been issued to companies to explore for coal in Tete. Around 36 mining companies are active in the province, but all will be reviewing their plans in the light of the problems faced by Rio Tinto. Rio Tinto, Vale of Brazil, and Beacon Hill Resources of Britain have started exports through Beira. They are forced to use road because the Sena line linking the port and mining hub can carry only six million tons a year. There have also been delays in the upgrade of the line, as well as derailments and accidents. This is putting severe pressure on the infrastructure and raising the cost of the coking coal. Exports of 100 million tons a year within the next decade were being forecast. However, Rio has also said that reserves of coking coal in its mine are less than thought. One of the plans mooted for the transport of coal from the Rio mine by Riversdale was by barge along the Zambezi River, but this was rejected by the Mozambican government in May 2012 on environmental grounds. The medium- to longterm solution is a rail link through Malawi to the port of Nacala. Alternatively, a new coal port is being considered. Alternatives are needed because the port of Beira will not be able to handle the projected volumes.