|
"We're close to a solution," Paulo Horta said in an interview with Dow Jones Newswires. "The Mozambican government is moving the process along...Commissioning (of our project will occur) without any problem," he said. Ricon, an Indian consortium responsible for renovating the Sena railway line, was supposed to complete the renovation by March 24, according to local newspapers, but the line is running behind schedule, prompting the government's Mozambican railway company to threaten to take over the project if it fails to meet its deadline. The Sena line is the only railway line that currently exists to transport coal from the recently discovered and highly promising Tete coal basin. Both Vale and Australia-based Riversdale Mining Ltd (RIV.AU) have rights to transport 4 million tons and 2 million tons of coal respectively along the line, although both companies are already working on alternative routes to handle their expansion plans. Vale plans to produce 1.0 million tons of coal for export in 2011 and then increase its output to 6.0 million tons in 2012, 8.5 million tons in 2013 and 11 million tons in 2014, Horta said. Vale's coal processing plant and railway will be tested in May with a view towards exporting its first coal at the end of June, beginning of July, Horta said. Horta declined to comment on the rate at which the Sena line would expand to accommodate the region's increased production, but he said that Sena "will have to accompany" the increased output from the region. Vale's Moatize project is on course to become the company's flagship coal project. Vale is spending $1.6 billion to develop the first phase of the Moatize project, which envisages ramping coal production to a nameplate capacity of 11 million tons of coal products by 2014. This compares to 3.9 million tons of coal produced from Vale's Australian operations and about 3.0 million tons from its Colombian operations in 2010. Vale has so far spent $1 billion on the Moatize project and plans to spend another $470 million this year with the remaining amount to be spent in 2012, Horta said. The project, which will employ 1,000 during its operation, mostly Mozambique, will mine 26 million tons of coal annually in the first phase of the project and produce 8.5 million tons of coking coal and 2.5 million tons of thermal coal annually. Coking coal is used to make steel while thermal coal is used to produce electricity. Vale expects to double its production capacity to 22 million tons in a second phase expansion plan which is due to be approved this quarter, Horta said. "It's going to be a great mine," he added. The key markets for Moatize coal will be India, Europe, South America and Asia, Horta said, noting that the project has a competitive advantage due to lower freight costs stemming from its proximity to customers and also the high quality of its product. Vale is also conducting a feasibility study to finish the construction of railway line that would connect Vale's operations to the Mozambican port of Nacala via Malawi. Horta expects coal will be exported from the Nacala line by 2013 and would be capable of handling any coal that can't be shipped via the Sena line. Vale considered using the Zambeze river to export coal to Biera but Horta said it wasn't economically viable. When asked what are the key issues for the year ahead, Horta said "the biggest challenge is to start the industrial process (of producing and exporting coal), making adjustments and establishing a framework for logistics. It's what we need to do." Vale |
Vale's Mozambique coal exports on track despite rail issues