Mozambique in talks with coal mining companies over depressed market

Mozambique, one of Africa’s fastest emerging mining frontiers is dialoguing with its foreign coal mining partners’ to find ways of helping them ride out depressed markets following a free-fall of the price of the heating commodity, says its mineral resources minister, Esperance Bias.

The price for thermal coal has plunged more than 10 per cent in the last two months as the presumed major customers – China and India – make it clear that renewable energy is offering a competitive alternative to coal and gas.

The government understood that companies such as Vale of Brazil and Rio Tinto, which helped Mozambique to start up in 2011 as a coal producer and exporter, were feeling the pain of depressed global prices for coal used in steelmaking and generating power.

However, Mozambique is not ready special tax breaks to ease the pain at the moment; Bias is cited by Reuters as saying. Last year Mozambique generated over US$2 billion into the sector following the influx of multinational companies into the country in search of various mineral resources.

The southern African nation, which still bears the scars of a 1975-1992 civil war, has the world’s fourth-largest untapped recoverable coal reserves, estimated at over two billion tones.

Vale is investing billions of dollars on rail and port networks to bring greater volumes of coal to the market, up from a current export capacity of five million tons per year. It is targeting 22 million tons by 2017/2018.

The mining industry in Mozambique is getting bigger, giving a sigh of relief to the country. This will mean more income being generated, which according to Bias, has led to various deposits like basic metals like graphite and iron being discovered over the last few years when the country undertook extensive geological surveys.

In the western province of Tete, mines have opened to exploit the huge coal reserves and this has led to an increase in coal exports. This year, they expect to reach 6.5 million tons in exports, while last year 3.8 million tons were exported at a value of US$ 370m.

Coal companies issued mining concessions by the Government intend to create a capacity to transport over 11 million tons of coal per year to the port by 2015. Capacity is due to continue to expand to 13 million tons in 2016 and 18 million tons by 2017.

The coal companies have contributed significantly to the creation of jobs and have increased the volume of business for small and medium sized Mozambican enterprises.

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