Mining group Rio Tinto analyses total or partial sale of its coal project in Mozambique

23 January 2013

The Rio Tinto group, the world’s second-largest mining group, may sell its operation in Benga, Mozambique, financial news agency Bloomberg reported, whilst the Financial Times said that a partnership was being considered with Brazilian mining group Vale.

According to the source cited by Bloomberg the London-based group is re-evaluating its coal mining project in Mozambique and considering all options including “total or partial sale of the assets.”

According to the Financial Times, in its Tuesday edition, Rio Tinto may alternatively partner with competing mining companies operating in Tete province, such as Brazil’s Vale, to build and use railway facilities.

The group announced last week that its financial statement contained a write down of US$3 billion related to its Mozambique project due to an overestimate of coal reserves at Benga, in Tete province, and a lack of transport capacity in the country.

The proposal put forward by the group to transport coal along the Zambezi River was rejected by the Mozambican government and the Sena railroad, which links Tete to the port of Beira does not enough capacity to carry all the coal produced.

Due to total write-downs of US$14 billion, US$3 billion of which related to Mozambique and the remaining US$11 billion to aluminium production operations in Canada, the group fired its chief executive, American Tom Albanese, who was replaced by Australian Sam Walsh. (macauhub)