Rio Tinto and Savannah mining JV awaiting government approval

Savannah and Rio Tinto plan to start construction of a major new heavy sands mine in southern Mozambique in 2017, but the joint venture they agreed last year is still awaiting approval from the Ministry of Mineral Resources and Energy.
The joint venture, to combine Savannah’s Jangamo mining licence in Inhambane with Rio Tinto’s adjacent Mutamba area, and its Chilubane area in Gaza province, was announced in June 2015.
The initial plan is to develop the Mutamba/Jangamo project in Inhambane Province, 40km south of Maxixe, targeting ilmenite and zircon, ingredients in making titanium. Savannah Resources will be the operator of the project and own 51% once a the feasibility study of the new mine is completed. Rio Tinto will buy the end product to use in titanium production outside Mozambique.
Savannah hopes to prove that the combined licence areas have between 7,000 and 12,000 million tonnes of mineable sand, with a 3-4.5% content of the heavy minerals it wants. Combining the two companies’ projects should give sufficient ore to support a mining operation for 20 years, according to a presentation released by Savannah Resources on 18 February 2016.
Current market conditions are not favourable for Mozambique’s heavy sand miners, however. Ireland-based miner Kenmare Resources defaulted on its debt earlier this year after failing to agree a deal to sell its Moma mine in Nampula province in 2015. Weak market prices for its ilmenite, zircon, and rutile mean it could face bankruptcy if it cannot negotiate a new deal with its creditors.


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