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Mining & Resources

Vale in Mozambique: On track for success

24 May 2013, by Informa Insights

Roger DowneyThe International Monetary Fund’s (IMF) latest World Economic Outlook predicts that economic activity in Africa will “remain robust” in the next few years. Economies in sub-Saharan Africa are expected to achieve growth rates not seen outside Asia. Mozambique is one of the powerhouses of the region with a record coal export of 4.9 million tonnes in 2012. In the lead-up to 4th annual Mozambique Coal & Energy Conference, we had the chance to speak to Roger Downey, Executive Director of Fertilizer and Coal at Vale about the company’s current projects in Mozambique.

IMM Events: In 2012 Vale has run a record of 1000 coal trains from Moatize mine through to the Port of Beira in comparison to 120 trains on the same route in 2011. This is a great achievement. Do you think the export rate for coal in Mozambique will continue to grow at such a rapid rate?

Roger Downey: Vale’s Moatize project is one of the most successful Greenfield developments in Africa in recent times. Nevertheless, it took us 7 seven years between our preliminary feasibility studies and first shipment in August, 2011. The Sena-Beira rail and port system, which was brought back to life after 30 years of inactivity, enabled our coal shipments to take place before the Nacala Export Corridor is ready. In 2012, our first full year in production, we produced 3,8Mt of coal, railed 2,35 Mt and shipped 2,2 Mt, as we ramped up both the mine and the Sena-Beira system, where we are working hard, alongside Mozambique Ports and Railway (CFM), to overcome the challenges of moving large bulk volumes. Our coal shipments from Mozambique will grow as we ramp up the Sena-Beira, however, it is the Nacala Corridor that will catalyse our growth.

IMM Events: What factors will play a major role in achieving further progress?

Roger Downey: This is one of the most exciting projects of the mining industry with the potential to transform the lives of many thousands of people and communities.  We are proud of our achievements, grateful to be part of this project and conscious of our responsibility with the communities, employees, country and shareholders.

Through our relentless commitment to a responsible relationship with communities in which we work the environment and with unflinching regard for safety we pave the road towards the long term success of our operations.

P13W07_Moz-Coal_477x110IMM Events: Earlier this year, there have been some reports about derailments of exporting trains. What impact does the provision of adequate transport infrastructure have on supporting Mozambique’s future growth? How can industry and government work together to improve this?

Coal is a bulk commodity and as such it is dependent on efficient, reliable and safe logistics systems. It is fundamental for the industry and for the country of Mozambique, to develop a reliable, efficient and cost effective logistic system, capable of safely moving millions of tons of product to clients and markets which are located most times thousands of kilometres away from the mining areas.

Vale has a long experience in the running of heavy bulk logistics systems and has been cooperating with CFM, the Mozambican rail operator, to achieve an increasingly safe, reliable and efficient railway, which will be key to the growth of Mozambique’s coal exports. Vale and CFM are also working together to implement the Nacala corridor which will have an initial capacity of 18 Mtpy and comprises a 900 km railway and a deep water port,  this will go a long way to ease the logistics constraints we currently face.

IMM Events: Vale’s Nacala corridor development is currently your biggest project in the region. Can you give us a brief update on the progress of the project?

Roger Downey: The completion of the rail link between Tete and Nacala by the end of 2014 is a critical step towards achieving a world-class logistics system.

The project is ongoing, on schedule and on budget. We plan to invest US$ 3.4 billion on the railway to refurbish approximately 682 km of existing railway and 230 km of Greenfield railway.  We are also investing US$ 1 billion to build a deep water port at Nacala.

We expect to rail our first coal train by the end of 2014 and load the first ships early in 2015. Construction is moving ahead at a very strong pace and we are confident that this target will be met.

Finally we are investing US$ 2 billion to expand the Moatize Mine, which will reach 22 Mtpy of installed capacity by 2015.

The investment in Moatiza and in Nacala will catapult Vale into becoming a major metallurgical coal supplier and the operator of one of the world’s largest and lowest cost met coal mines.

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