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    9 February, 2011
Giant coal mine takes shape at Benga
By Paul Fauvet

Benga (Mozambique), 9 Feb (AIM) – In the pit below us, giant vehicles are moving hundreds of tonnes of earth and rock to expose the coal below.

A huge mechanical shovel picks up what is known, in mining jargon, as the overburden, and quickly fills up a truck. But these are not trucks for normal roads – the smaller ones move 140 tonnes, and the larger ones 240 tonnes. Behind the trucks a tanker containing 80,000 litres sprinkles water on the paths to keep the dust down.

Such gargantuan machines had to be brought here in pieces and assembled on site. It took 780 loads to bring all the components from the South African port of Durban to the western Mozambican province of Tete, and each journey took 14 days.

This is Benga, in the Moatize coal basin, less than an hour’s drive from Tete city. We are standing on the rim of a large hole, which is a few metres deep. It doesn’t look much like an open cast coal mine yet, but officials of the Australian company, Riversdale Mining, are confident that in September Benga will be sending shipments of hard coking coal to world markets.

Moatize is perhaps the last great unexploited coal basin in the world. Under Portuguese colonial rule, the coal deposits were barely scratched, and only small amounts of coal were excavated from a couple of underground mines. Serious exploratory work could only occur once the war of destabilisation was over in 1992.

Companies such as Riversdale, and the Brazilian mining giant Vale, drilled across the basin, and proved that much of Tete province sits on vast seams of coal, containing many billions of tonnes of reserves.

In some places, the rivers flowing through the province have exposed the coal. Outcrops of coal can be seen on the banks of the Zambezi, and of one of its major tributaries, the Revobue.

Here at Benga, the coal was just 10 metres below the surface. During the exploration Riversdale drilled 279 holes across the 24,000 hectare Benga concession. The cores taken from those holes showed that the coal seams are between one and 20 metres thick.

25,000 cubic metres of overburden are excavated per day from the Benga pit, and the amount will increase as more giant machines are assembles and join the work.

No Mozambican had ever handled machines this size before. Riversdale bought in 40 Thai technicians to drive the vehicles and train Mozambican drivers. First, the Mozambicans work on a simulator at the Riversdale training centre, and then they are sent to the field to sit beside their Thai trainers in the vehicle cabs.

So far five Mozambicans have graduated to sitting beside the Thais, and one by one, as their skills are proved in practice, they will take full responsibility for the machines. Within a few months Riversdale believes there will be enough trained Mozambicans to operate all the machines, and the Thais can be sent home.

In all, 1,286 people have been trained and are ready to start construction of the mine proper and its various facilities. For specialist skills, 473 have been trained externally (by South African and Australian specialists). A further programme is about to start to train 70 artisans (including mechanical fitters, boilermakers and electricians) who will maintain the plant, and the 45 “process operators” who will run the Coal Handling and Processing Plant (CHPP).

All the preliminary requirements for mining at Benga were obtained last year. The government granted Riversdale the mining concession at Benga for 25 years, renewable for a further 25, and the Ministry of Mineral Resources signed a mining contract with Riversdale, At the same time the necessary Environmental Impact studies were approved, giving the green light for the Environmental Licence, without which no significant mining project can operate in Mozambique.

Mining the coal itself will begin in March. For a few months, the coal will be stockpiled and then conveyors will take it to the CHPP, where it will be washed, sorted and sized.

So far all that visibly exists of the CHPP is a few steel pillars – but all the equipment is on site, and it is now just a question of assembling it. The deadline for commissioning the plant is September, and later that month the first coal from Benga will be shipped from Beira to Riversdale’s customers.

The plan for the first year is to produce 5.3 million tonnes of “run of the mine” (ROM) coal. This is the coal before it has been treated in any way. Once it has been sorted, the final product, for export or for domestic use, will be around two million tonnes a year. Riversdale expects to ramp ROM production up to 10.6 million tones a year in the second phase and eventually, if all the logistical problems can be overcome, to 20 million tonnes a year.

The Riversdale Executive Director Anthony Martin points out that Riversdale has more licences in the Moatize basin than any other mining company. Next door to Benga is Riversdale’s Zambeze project, which is even larger. While there are proven reserves of four billion tonnes at Benga, at Zambeze the figure is nine billion tonnes.

Riversdale has a further 16 exploratory licences scattered across Tete province. Martin recognises that Riversdale cannot simply hold these in reserve. If it does not work on them, the government will take them back. So exploration to establish the coal reserves is going on in all of them, despite difficulties in access to the more remote areas.

Martin says that Benga will produce three types of coal – world quality hard coking coal, for use in the steel industry, export quality thermal coal, and lower grade thermal coal for domestic use (notably for a coal fired power station which Riversdale plans to build at Benga).

The coking coal market is continuing to expand thanks to growing demand in China, India and Brazil. Australia is far and away the largest supplier of coking coal – but Martin envisages Mozambique becoming a significant player with in a decade and a half. His prediction is that by 2025 “Mozambique will be established as one of the world’s new sources of first class coking coal”.

It will be competing with other newcomers such as Indonesia, Russia and Mongolia. Furthermore there is enough coal in the Moatize basin, accessible at relatively low costs, to keep mining operations running for a century or more.

Although a much larger company, Rio Tinto, has made a takeover bid for Riversdale, Martin insists that this will change nothing on the ground in Mozambique. Riversdale-Mozambique will continue as it is now, he says, with the same name, the same staff, the same operations, and the same calendar for developing the mines.

Rio Tinto has offered to purchase the shares of all the existing Riversdale shareholders. Martin declined to speculate on whether the shareholders will all accept – but he pointed out that, as one of the world’s largest producers of coking coal, Rio Tinto is well placed to maximize the value of the Moatize basin resources, and has the funds to support the development of gigantic mining projects.
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