Vale Mozambique Coal Reaches Port; Eyes Aug Export

Brazilian mining titan Vale SA (VALE) said Tuesday that it delivered its first coal by train from its Mozambican Moatize project to the port of Beira on Monday and expects to export the coal in August.

The first train carried 2,200 metric tons of coal from Vale’s Moatize coal mine in the massive, coal-rich Tete basin in north west Mozambique to the costal port of Beira via the Sena railway line.

Vale is the first of the major mining companies to start producing thermal and metallurgical coal from the Tete basin. The Moatize project will be able to produce up to 11 million tons of coal, 8.5 million tons of which will be metallurgical coal and 2.5 million tons thermal coal.

Rio Tinto PLC (RIO), which completed its $4 billion purchase of Mozambique-focused mining company Riversdale Mining Ltd. on Aug. 1, expects to produce first coal from the adjacent Benga coal project by the end of the year and to produce 2.4 million tons of coal annually starting in 2012, 1.6 million tons of which will be metallurgical coal and 0.8 million tons thermal coal.

Mining companies and steelmakers have flocked to the Tete basin to mine the high-quality coking coal, a key ingredient in steelmaking. Metallurgical or coking coal is only produced in a few regions globally and prices have surged over the past year to record highs due in part to supply disruptions and burgeoning demand from emerging economies such as China which are undergoing fast-paced urbanization and industrialization.

The Tete basin, which doesn’t currently export coking coal, is expected to account for 18% of the global total sea-borne coking coal trade in 2025, making it the world’s second largest source of sea-borne coking coal after Australia’s Queensland basin, according to a Riversdale presentation in July.

Queensland accounted for about two-thirds of the world’s sea-borne coking coal trade in 2010or 110 million tons.

Vale said: "The Moatize coal project, currently Vale’s largest coal investment, is part of the company’s strategy to turn itself into a large global player in this area. Other than the project in Mozambique, Vale has coal assets and a portfolio of exploration projects in Australia and Colombia as well as minority stakes in two joint ventures in China.

Vale, which has been present in Mozambique since 2004, started implementing the Moatize project in 2008 and employed more than 7,500 people during construction. Vale said about 90% of its pre-operations team were Mozambicans and trained in Mozambique and Brazil.