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    18 January, 2012
Ncondezi to support joint study on export routes
London, 18 Jan (AIM) – The British-based coal company Ncondezi announced on 18 January that it is to form a partnership with Rio Tinto Coal Mozambique and Minas de Revuboe to look at the construction of a new railway and port to export the huge coal reserves from their concessions in the western Mozambican province of Tete.

This follows from an “order of magnitude study” which was completed in November last year.

The work will be led by Rio Tinto, and will look at the practicalities and costs of building new infrastructure capable of exporting up to 100 million tonnes of coal per year. The study will also look at the broader economic and social benefits of the scheme to people and agricultural industries in the neighbouring province of Zambezia, where the new port and most of the new railway would be located.

Minas de Revuboe is owned by Nippon Steel of Japana, POSCO of Korea and the Talbot Group of Australia.

Ncondezi’s decision to take part in the study brings with it the entitlement to export 10 million tonnes of coal a year though this route, which is the company’s expected output once in full production.

According to the chief executive of Ncondezi, Graham Mascall, “signing of the Agreement with Rio Tinto and Revuboe represents a tremendous opportunity and step forward for the Company in securing rail and port capacity for the future export of coal from our Ncondezi Project. Rio Tinto has significant experience in developing rail and port infrastructure projects around the world, and I believe that it is best placed to lead and implement this project in Mozambique”.

The preliminary study suggested that a new deep water port be built at an undisclosed location north of the mouth of the Zambezi River mouth. It would be big enough to handle Capesize ships (which are so large that they cannot navigate the Panama Canal).

Ncondezi will not have to pay for the forthcoming study or the development costs, other than those associated with the rail spur joining the Ncondezi concession with the new railway.

The company expects to begin mining coal in 2015 and “remains optimistic about the ability to also access rail and port capacity for transport of its coal on the Sena-Beira and Nacala corridors, which are to be expanded during the next few years”.

Transporting the coal to market remains a critical bottleneck. The Sena railway line, which runs from Moatize to the port of Beira, only has a capacity of six million tonnes per year. Even if work is carried out to double this capacity, it will still be nowhere near meeting the 100 million tonnes of coal per year that the country could be producing by 2020.

Another major coal miner, the Brazilian company Vale, plans to build a new railway linking Moatize to the northern Mozambican port of Nacala, via southern Malawi.

Vale and Rio Tinto are also considering building thermal power stations at Moatize, each capable of generating 2,000 megawatts of electricity. In addition, the Indian company Jindal Steel and Power is looking at building a power station to produce 2640 megawatts of electricity.
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