Vale Increases 2011 Moatize Coal Forecast

30 June 2011

London — The Brazilian mining company Vale has announced that it intends to produce 1.5 million tonnes of coal this year from its open cast mine at Moatize, in the western Mozambican province of Tete.

This is a 75 per cent increase on its previous estimate of 850,000 tonnes for the year. The company plans to increase output to 6.3 million tonnes in 2012.

Vale had hoped to begin exporting coal in July, but delays in rebuilding the Sena railway line from Moatize to the port in Beira have meant that the company has postponed launching exports until October.

Production in the first phase will increase to 11 million tonnes per year, of which three quarters will be coking coal. Output will then double to 22 million tonnes per year during the second phase beginning in 2014.

The company’s investment in Mozambique is huge – this year it will invest 422 million US dollars in the Moatize project.

There are now 36 mining companies operating in Moatize district, and they are all facing a nightmare in getting their coal to the coast for export.

Even when the Sena railway line is running it will only have the capacity to transport six million tonnes of coal per year. A further upgrade could increase this to 12 million tonnes per year. Yet coal output from the Zambezi coal basin could by then be running at over 80 million tonnes per year.

Vale is considering funding a 900 kilometre railway line from the mine to the port of Nacala, in the north of Mozambique. The line would take five years to complete, and would cost (including the upgrading of the port) about four billion dollars.

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