Mozambique Coal Exports Set to Resume

BRISBANE, Australia - March 20, 2013 - PRLog -- The railway, which links Mozambique's coal mines in Tete province to Beira in the south some 470km away, was shut after heavy floods washed away ballast, bridges and culverts close to Beira in the Zambezi Valley.

Rio Tinto declared a force majeure at its Benga coal mine and asked its mining contractor, Johannesburg-listed Eqstra Holdings, to stop operations at the mine.

Eqstra subsequently entered into negotiations with Rio Tinto on the basis that an interruption of railing capacity on the rail route did not constitute a force majeure with the power to halt mining at Benga.

Eqstra Holdings CEO Walter Hill said in an interview with online publication BDLive:  "There's no conflict on it. We've notified them that we don't believe it was a force majeure and we've ... come to an agreement on how to deal with the problem."

Hill estimated it would take 24 hours to get Benga back into full production after a two-week shutdown at the mine from February 20 to March 6.

For its part, Brazilian diversified mining company Vale said it expected to lose about 250Kt of coal exports as a result of the shutdown. It had already been forced to reduce capacity from its Minas Moatize operation because of constraints on Sena.

Citing Hill, BDLive said Eqstra had two years remaining of a five-year contract to do waste stripping and coal mining at Benga, with an option to negotiate an extension.

"We have a positive relationship with Rio Tinto and we'll start negotiations well beforehand to establish whether we could extend the life of this contract," Hill said.

The flooding of the Sena rail route and the recent write-down by Rio Tinto of some US$3B of its $4B investment in the Benga and Zambeze mines represent a blow for confidence in Mozambique's coal industry which has seen investment of $5B over the last five years.

However, Mines Minister Esperanca Bias said at a recent conference in Mozambique the country was still capable of exporting 50Mtpa of coal by 2020. Exports were 4.9Mt in 2012.

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