Interesting item on why Mozambique for the big guys Gefi.
Hoping Continental can get one up on these guys by being successful in Kenya and taking advantage of the shorter distant to the burgeoning Indian market.
The other interesting comments in this item are that
* the Mozambique logistics development for capesizes is a couple of years away with curently capacity for only 60,000Mt.
* They have a fair way to go to upgrade rail/port logistics to handle the 20Mt they eventually expect to export.
* And the big factor for me,is the apparent concentration on COKING COAL rather than the thermal export market.One can add to this that there is to be installation of two thermal power plants and it seems there is not a great motivation on the part of developers to service the Indian export market which should bolster prices.
On prices,they seem to be settling at just below $120/T RBI.
September 1, 2011 - The African continent has historically meant just one thing to the global coal mining industry: South Africa. However, a new coal power is emerging in the form of Mozambique.
Many investors describe the country as the world's last big undeveloped coal province, but the big challenge is transporting the coal to overseas customers.
Planned investments suggest coal exports on a scale similar, if not larger, than South Africa.
Until recently, Mozambican coal production was limited to a few thousand tons of coal a year, sold locally or exported to neighboring states.
However, about 140 exploration licenses have been issued in the country over the past decade, with the vast majority located in Tete Province in the far northwest of the country.
Tete is separated from the rest of northern Mozambique by southern Malawi. A succession of huge discoveries has been made.
Of the reserves uncovered to date, thermal coal accounts for roughly 25-30% and metallurgical coal 70-75%.
Two huge projects are at an advanced stage of development in Tete's Moatize Basin and a dozen others are set to follow.
Brazilian giant Vale is investing $1.7 billion in its Moatize project, where output is expected to reach 11 million mt/year by end-2013, comprising 8.5 million mt/year metallurgical coal and 2.5 million mt/year thermal.
The company has forecast that this could increase to as much as 26 million mt/year when Moatize II is developed.
Vale is already constructing a coal handling and preparation plant with processing capacity of 26 million mt/year to serve both phases, so it seems confident that it will proceed with the second phase.
First coal from the Moatize mine arrived at the port of Beira by rail August 8 and the first shipment was due to leave the port by end-August.
The scale of Australian firm Riversdale Mining's discoveries on its acreage in Tete Province prompted its acquisition by Rio Tinto on August 1 for $4 billion.
First coal from the company's Benga project is due at end-2011 and production is scheduled to reach 5.1 million mt/year by 2013: two-thirds of this will be metallurgical coal and one third thermal.
Riversdale holds a 65% stake in the venture and Tata Steel of India the remaining 35%.
The Australian company holds a further 21 coal exploration licenses in Tete, including one that contains the Zambeze project.
Riversdale increased its reserves estimate on Zambeze last year to 9 billion mt, ahead of Benga's 4.5 billion mt and now estimates that it can produce 20 million mt/year combined on the two ventures.
Vale will use some of its coal to supply its own 300 MW power plant, which will provide electricity to the national grid as well as to Vale's mining operations.
In addition, Riversdale had planned to construct a 500 MW coal-fired generation plant, to be increased to 1 GW at a later date, again for both dedicated and general use. Rio Tinto has yet to confirm whether it will continue with this side of the project.
However, the vast majority of Mozambican coal output will be exported and the most likely markets are India and China.
The latter is changing from coal exporter to net importer, while even the limited liberalization of the Indian coal sector has prompted massive Indian investment in Mozambican coal prospects to secure feedstock for its domestic industries.
China's net coal imports increased 29% last year, with the focus on Mozambique's strength: coking coal. Chinese annual demand for coking coal stood at 540 million mt in 2010, but domestic production reached just 380 million mt.
Given China and India's rapidly growing demand for steel, their coking coal requirements are expected to continue to exceed their domestic output by an increasingly wide margin.
Transport logistics
Mozambique comprises a long slither of territory on the southeast coast of Africa, with nowhere very far from the sea.
However, the lack of infrastructure in the northern two-thirds of the country provides huge challenges to the mining industry.
Most of the country saw very little development during almost 500 years of Portuguese colonial rule, while the civil war that raged from independence in 1974 until 1992 resulted in the widespread devastation of most of the limited infrastructure that did exist.
Surveys undertaken in northern Mozambique as late as the 1990s found that people in some areas did not even realize they lived in Mozambique.
Over the past two decades, the country has enjoyed stable government and has experienced average economic growth of 8.5%, albeit from a very low base.
The government in Maputo and the international donor community have prioritized the redevelopment of the colonial era railway network and the country's ports as a means of spreading the economic recovery beyond Maputo and its immediate environs.
As in much of Africa, colonial era railway lines were developed to export agricultural and mineral commodities to the metropolitan power and tended to run directly from inland provinces to the nearest available coastal port.
As a result, Mozambican railways run west to east to Indian Ocean ports, but are not connected to each other. (See related map: Mozambique coal and power).
Under World Bank direction, the nation's main ports and railways are now operated under concession by foreign consortia, sometimes including state-owned transport utility Portos e Caminhos de Ferro de Mocambique.
Mozambique already has one coal export facility, Matola Coal Terminal, but this is located in the far south of the country and is designed to handle South African rather than domestic coal exports.
Two other, more conveniently located ports have been earmarked to handle the huge volumes of coal that will be mined in Tete: Beira and Nacala.
Both are currently rather small ports with limited cargo handling capacity, but they will be expected to handle huge volumes of coal exports in the near future.
Beira is located in Sofala Province to the south of Tete Province and is connected to the Moatize Basin by the Sena railway.
Berth 8 at Beira is being prepared to handle up to 6 million mt/year of coal, but a dedicated coal terminal is to be developed to serve both Vale and Riversdale.
Government and CFM officials have provided varying estimates on the handling capacity of the planned terminal ranging from 12 million mt/year to 24 million mt/year, but the precise details remain to be determined.
A CFM spokesperson announced in August that a consultant was being sought to secure funding for the project, which will probably be developed and operated by a combined consortium of foreign investors and CFM.
Work on dredging Beira harbor was completed in July, allowing coal carrying vessels of up to 60,000 mt dwt to use the port.
Further work is likely to be carried out by a dedicated dredger to enable larger coal ships to enter the harbor.
In July, the Danish International Development Agency agreed to provide ?40 million ($57.9 million) to enable the purchase of the vessel.
d.
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