Moatize coalfield moves closer to developmentBrendan RyanPosted:...

Moatize coalfield moves closer to development
Brendan Ryan
Posted: Thu, 13 Mar 2008
[miningmx.com] -- ASX-listed junior Riversdale Mining is intent on playing “catch-up” to giant Brazilian resources group Vale in developing projects on the Moatize coalfield near Tete in Mozambique.


It’s enlisted heavyweight support in the form of Indian steel group Tata, which has invested A$100m to buy a 35% stake in two of Riversdale’s licence areas; that entitles Tata to buy 40% of the coking coal off-take on commercial terms.

Vale unveiled details of its Moatize project at last year’s Coaltrans conference in Sandton. It will spend up to US$1.5bn to develop a mine that will export 11 million tonnes/year through the port of Beira from about 2013. That capex number includes the construction of the port facility and any dredging required.
We have a can-do attitudeNot included is the cost of rehabilitating the existing 577km long Sean to Beira railway, which is being carried out by the CCFB consortium, made up of 51% by the private sector Recon consortium and 49% by Mozambique state rail company CFM.

That’s where it gets interesting, judging by comments made by Riversdale chairman Michael O’Keeffe during a visit to the site for media and fund managers immediately after the Mining Indaba conference in Cape Town early in February.

Capacity is being made available on the line and at the coal handling facility at Beira to also cater for Riversdale’s requirements. Riversdale has signed a memorandum of understanding to that effect.

Yet O’Keeffe raised the prospect of Riversdale barging its coal 400km down the Zambezi from Tete to the coast, from where it would be barged out to sea and loaded on to vessels anchored offshore.

He said he’d appointed a consultant to carry out an evaluation of the Zambezi to assess the viability of dredging a channel to the coast that could be used year-round. He said that proposal also tied in with regional Southern African Development Community (SADC) plans.

A SADC study is underway, exploring ways of using the Zambezi and Shire rivers to transport cargo from Zambia, Malawi, Zimbabwe and Mozambique.

There are some obvious problems, even though, as O’Keeffe pointed out, construction materials for the Cahora Bassa dam were barged upriver during the early Seventies. Among those is that water levels drop sharply in the winter months due to the river’s flow being controlled by outflows from Cahora Bassa.

O’Keeffe commented: “I’m an Australian. We have a can-do attitude. The more people tell me something can’t be done, the more determined I get to do it. I’ve already been researching similar rivers in Indonesia, where coal is barged in that way. It must obviously involve co-operation, such as getting a more reliable release of water from Cahora Bassa throughout the year.”


Click Here to subscribe to our daily newsletterRiversdale has so far defined a 1.2 billion tonnes inferred coal resource in just one block of its prospecting “tenements” that cover 290,080 hectares after buying additional ground last year from another Australian junior operating in the region.

So far, developments on the ground have been limited to drilling work, which has indicated the deposit contains both coking and thermal coal. Some of that can be mined by opencast methods and evaluation work so far has shown that some have a “quality indicative of a premium hard coking coal”.

Coking coal is used to heat blast furnaces to produce iron and steel. Thermal coal is used as fuel for coal-fired power generating stations and for domestic heating purposes.

O’Keeffe signed up Tata because “we needed the deal with Tata for the credibility of having a major steel company on board”. Tata is also a logical partner, due to the proximity of the rapidly growing Indian market to Mozambique. He’s correct in that having Tata involved adds weight to his project proposals because currently there’s nothing to see on the ground but the odd drill rig and an old drill core shed. The rest is bush, baobab trees and the odd settlement.

Riversdale also needs to improve its relationship with the immigration authorities at Tete, which it said would provide visas on the spot for overseas visitors. They did not.

One of the operating advantages claimed by junior mining companies is their ability to react swiftly to changing circumstances and it seems Riversdale is about to do just that.

It’s supposed to be focused on developing a coking coal mine that would start exporting in 2010 but, during his visit, O’Keeffe floated the possibility of Riversdale putting up a power station project ahead of the coking coal project – to take advantage of the power crisis hitting South Africa.

“We might build a power station first to utilise the thermal coal. That’s still to be decided,” O’Keeffe said.

Riversdale could produce a 23Mj/kg (megajoule per kg) thermal coal product that could feed straight into a power station without the need to be upgraded. The power lines from the Cahora Bassa hydropower scheme run straight past Riversdale’s proposed mine site and there’s 500MW of spare transmission capacity available on them. Those are two major incentives for an independent power producer to build a 500MW power station near Tete.

Vale’s original proposal for development of its deposits at Moatize also included the construction of a coal-fired power station.