African buzz
Is all well in Mozambique?
Mozambique’s coal mining sector has lost some of its lustre in the
past few years. Not too long ago, the country was getting a lot of
attention from potential investors as new coal fields opened up a region
previously decimated by civil war. As the attention started shifting
to the gas fields of the Rovuma basin instead, and one or two major
coal mining companies got their fingers burnt, the Mozambique coal
mining story started disappearing from the front pages.
Moreover, inadequate infrastructure still hampers development,
and security became a risk with the emergence of new extremist
groups in the north. To make things worse, the government
recently failed to honour debt responsibilities and the IMF
suspended further support.
Vale, the Brazilian mining giant, opened the USD1.7-billion
Moatize coal mine in Tete province in north-west Mozambique in
2011, and has operated the mine ever since. One wonders, however,
if all is well at the Moatize Mine. The mine hasn’t performed well
this year and continues to incur losses.
In the group’s production and sales report for the third quarter
of 2018, Vale predicts a drop in production from 15 million to
12 million tonnes of coal this year. The report states that this
downward review is due to subsidiary Vale Moçambique reviewing
processes and plans at the Moatize Mine.
According to Marcelo Tertuliano, CEO of Vale Moçambique,
2018 has been earmarked as ‘the year of stabilisation’ to ensure a
production increase from 2019 onwards. The stabilsation actions,
the company stated in May, will include the removal of unusable
material, the opening of new mining sections, and the preparation
of new wells.
Nonetheless, according to reports, the operating environment
has improved somewhat, and there might just be a glimpse of
renewed interest in the country once hailed as the southern
African miracle story.
Mozambique’s coal mining sector has lost some of its lustre in the past few years.
In August, Tertuliano announced that the mine had ended the
first half of the year with debt of USD7.9-billion, an increase of
USD100-million compared to the amount recorded at the end
of the first quarter. In addition, he announced in August, the
company’s net income in the second quarter remained negative
at minus USD193-million, higher than the negative result of
USD139-million in the first quarter.
Bad weather, high operating costs, and the appreciation of the
Mozambican currency, the metical, are among the main negative
influences being mentioned as causes of the disappointing
performance by the company in the second quarter of 2018.
Should we start to worry about Mozambique and Moatize?
Katanga suspends cobalt exports from DRC
Toronto-listed Katanga Mining’s subsidiary, the Kamoto Copper
Company (KCC), has temporarily suspended the sales and export
of cobalt from its Kamoto project in the DRC. According to a press
release by Katanga, the levels of uranium detected in the cobalt
hydroxide produced at Kamoto exceed the acceptable limit allowed
for export of the product through main African ports to customers.
Until now, the total cobalt production impacted by the sale
suspension amounts to 1 472 tons of finished cobalt. The company
says that the low levels of radioactivity detected in the uranium to
date do not present a health and safety risk. Production of cobalt at
the Kamoto project is expected to continue without reduction in the
quantity produced. Katanga says that KCC is conducting additional
surveys to identify the source of the uranium and exploring various
options to mitigate the impact of the sales suspension.
10 AFRICAN MINING JANUARY - FEBRUARY 2019
According to the company, KCC will construct an ion exchange
system that costs about USD25-million, which will remove
uranium from the cobalt. The ion exchange system is expected to
be commissioned by the end of the second quarter 2019, subject to
obtaining the necessary approvals. The finished cobalt production
will be stored on site and processed in the ion exchange system
once construction is completed. Once the system is commissioned,
the processing and sale of the cobalt stored on site is expected to be
completed before the end of the fourth quarter of 2019.
The temporary suspension of cobalt sales is expected to negatively
impact Katanga’s revenue during the fourth quarter of 2018 and
in the first and second quarters of 2019. The revenue that would
otherwise be recognised on cobalt sales during these periods is
expected to be realised in the third and fourth quarters of 2019.
www.africanmining.co.za