Mozambique is on the brink of a transformation driven by its mineral resources; and Riversdale Mining is bringing some much needed expertise and capital to the party, as chief operating officer Andries Engelbrecht tells John O’Hanlon.
Riversdale Mining, a resource company with its headquarters in Sydney, Australia, was set up in late 2004 by a group of experienced coal mining professionals interested in exploration, mining and development projects.
The company currently has no assets in Australia itself, and is named after the Riversdale Anthracite Colliery (RAC), near Vryheid in KwaZulu Natal, South Africa.
Riversdale’s first opportunity was in the form of the Zululand Anthracite Colliery (ZAC) based in the province of KwaZulu Natal. The colliery was purchased as a going concern from resources giant BHP Billiton in 2005. Anthracite is a hard, high rank coal containing a high percentage of fixed carbon and low percentages of volatile matter and ash. Due to the high fixed carbon content of the anthracite found at ZAC, it is sought after in the metallurgical markets, both domestic and abroad.
“We purchased ZAC with a three year projected life,” says Andries Engelbrecht, who joined Riversdale six months later as a manager at ZAC, of which he had intimate knowledge as a BHP Billiton manager. “The first thing we did was to start an extensive programme of exploration and development, and as a result of that the productive life of ZAC has been extended to 2023—and we are still prospecting there.”
ZAC is the only true anthracite mine in South Africa, he adds. “We are expecting it to yield 980,000 tons of run-of-mine material this year, and with at least ten years’ life, it has huge upside potential.”
Engelbrecht’s role has been expanded and he is now chief operating officer for all African projects. In 2006 Riversdale acquired 16 coal tenements in the Lower Zambezi Coal Basin in Mozambique and in 2007 a further six in Tete province, adjoining large holdings of the Brazilian company Vale. In all it now controls 250,000 hectares in Mozambique, close to the railhead at Moatize from where there’s a link to the port of Beira on the Indian Ocean.
Though it doesn’t feature at all on present day league tables, Engelbrecht believes Mozambique has the potential to become a really important exporter of hard coking coal, second only to Australia which is currently the largest exporter of seaborne hard coking coal to world markets. The primary market that will absorb this production will be the global steel industry, where massive expansion in the BRIC group of countries is certain to take place.
Mozambique is singularly well placed to supply hard coking coal to India and Brazil. Not only is the steel industry booming in these countries, but a large number of new coal-fired power stations are being built. Mozambique coal will have a significant freight advantage over Australia and Canada because of the easy shipping route from Beira to the west coast coal ports from Maharashtra to Gujarat.
So the Mozambique operations are really exciting, Engelbrecht says. Not all the 21 tenements can be developed at once; however coal from one of them—the Benga mine in Tete province—will provide Riversdale with its first shipments out of Beira in the second half of next year. It is a four billion ton resource developed in a smart joint venture between Riversdale and Tata Steel of India, with Riversdale holding a majority 65 per cent share. Tata Steel will be taking up 40 per cent of the hard coking coal produced from the Benga mine. Production from the mine will equal 5.3mt of run-of-mine during phase one. The feasibility for phases two and three have commenced; and phase three will see the Benga mine producing 20mt of run-of-mine coal per annum.
The 575 kilometre Moatize to Beira rail link already existed, but was severely damaged during the conflict years and had to be repaired. The aforementioned work was completed in January 2010 with the first train in 25 years arriving at the Moatize Station. The Port of Beira requires extensive repairs and upgrading in order for it to cope with the approximately 6mt of product to be exported through the facility between Riversdale and Vale. Riversdale, together with Vale and CFM (Portos e Caminhos de Ferro de Moçambique), the parastatal authority that oversees the railway and port systems, are working together to upgrade the port’s coaling Berth 8, ready for export cargos from the two mining companies.
If that were the end of the story, it would be a huge boost for the Mozambique economy, which will get substantial revenues from royalties and taxes. The country further benefits from the inflow of mining expertise from both Australia and South Africa (not to mention Brazil). Working in Mozambique, despite its relatively low stage of development, is not the uphill struggle one might expect, Engelbrecht insists. “Mozambique’s legislative system is modelled on that of South Africa, and we are expected to apply world best practices in all aspects of operations, health and safety, and environmental responsibility.”
He is keenly aware of the company’s social impact, which starts simply through employment. The Benga project currently employs more than 600 people, predominantly contractors; and though the project is in its early stages, he regards support for local education, agriculture and the control of endemic disease like malaria and HIV/Aids as being very much in the interests of the business.
The government of Mozambique has been very supportive and it is easy to see why. Not far away from the Benga project lies Riversdale’sZambeze Coal Project which Engelbrecht confidently describes as one of the biggest open pit coal resources in the world. It has, he says, been assessed as a resource of nine billion tons, easily accessible, on relatively flat terrain and not far from Tete and the Zambezi River.
Riversdale has signed a nonÔÇÉbinding memorandum of understanding (MoU) with Wuhan Iron and Steel (Group) Corporation (WISCO) and a logistics partnership agreement with the China Communications Construction Company (CCCC) for the development of the Zambeze Coal Project (Zambeze). The MoU provides for the acquisition by WISCO of 40 per cent of the Zambeze Coal Project (EPL 946L) for a total consideration of US$800 million, to be paid in three tranches and subject to achievement of certain milestones. When completed, the transaction values Zambeze at US$2 billion. www.rivmining.com.au
