Coal transport difficulties threaten Moatize project, says Brazil’s CVRD

3 August 2007

Sao Paulo, Brazil, 3 Aug – Uncertainty over transport structures for the Companhia Vale do Rio Doce (CVRD) Moatize coal mining project in Mozambique could make the venture impractical, the company’s CEO has said.

Roger Agnelli said Wednesday that CVRD is currently negotiating with an Indian company, which he didn’t name, to build a railway line to make coal production costs for the Moatize project more competitive.

CVRD, added Agnelli, is also in talks with the Mozambican government to find ways to make the Moatize coalmine, situated in the northwestern province of Tete, more economically viable.

CVRD’s CEO said that Brazilian mining company has run into logistical problems with coal and various mineral ventures in other African countries and other continents.

Shortages of energy are another problem being faced by CVRD as it attempts to expand its mining activities, noted Agnelli.

“Energy costs have risen in Brazil and in several other countries. Those that quickly work to deal with this question of cost and availability of energy will have a very competitive and comparative advantage at the world level.”

On 4 July, the Mozambican government formally gave CVRD a 25-year operating license for the Moatize coal field, which has estimated reserves of 2.5 billion tons.

CVRD plans to mine 11 million tons of coal per year, of which 8.5 million tons will be used as coke fuel in the metal industry and the remaining 2.5 million tons used to generate electricity.

Commenting just over a month ago on the approval of the Moatize venture by the Maputo government, CVRD’s CEO said the agreement was an “important step in the company’s strategies,” but highlighted the need for solutions to cut costs and improve the project’s logistics, including building of railways to transport coal. (macauhub)