mozambique's coal mining sector: building for boom
DESCRIPTION
A presentation on Mozambique's coal mining sector.TRANSCRIPT
Mozambique’s Mozambique’s Coal Mining SectorCoal Mining Sector: Building : Building for for Boom Boom
Why does Mozambique’s coal mining industry offer so much potential? Why does Mozambique’s coal mining industry offer so much potential?
Christy Tawii, Research Associate
Mining
19 October 201119 October 2011
Functional Expertise
• Particular expertise in:
- Collecting primary and secondary data
- Research and project delivery
- Monitoring and Evaluation
Industry Expertise
� Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives
- Energy Efficiency technologies (Mining and Beverages Markets)
- Production and Investment forecasts in the mining industry in Sub-Saharan Africa
What I bring to the Team
- Ability to work efficiently under pressure and as well as in a deadline driven environment
- Excellent research methodology and researching skills
Today’s Presenter
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- Excellent research methodology and researching skills
- Highly motivated and results driven
- A positive and professional work ethic
Career Highlights
- Prior to joining Frost & Sullivan, I was a Projects Officer at Southern Hemisphere Consultants , a socio-economic research firm in Cape Town, South Africa. I was involved in various tasks such as tender management and coordination, proposal writing, evaluations (baseline assessments, situational analysis, mid-term and summative evaluations) environmental social impact assessments and assisting in developing monitoring and evaluation systems.
Education
• Bachelors of Technology: Environmental Management from Cape Peninsula University of Technology, Cape Town, South Africa
• National Diploma: Environmental Health from Cape Peninsula University of Technology, Cape Town, South Africa
Christy TawiiResearch Associate
Mining
Frost & SullivanAfricaCape Town
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2
Overview of the Mozambique’s Economy: Mining Sector
The Mozambican Coal Mining Sector
Coal Development Projects: 2010 to 2015
Focus Points
3
4
Market Drivers and Restraints5
Key Industry Challenges
Conclusions6
Overview of the Mozambique’s Economy: Mining Sector
• Mozambique is one of the fastest growing
economies in Sub Saharan Africa
• In 2010, Mozambique’s economy grew by
8.0%, from 6.4% in 2009.
• Mozambique’s mining industry accounted for
3.0% of the Gross Domestic Product (GDP),
but contributed 66.0% of the country’s
foreign currency earnings in 2010
Agriculture, Forestry, and
fishing , 29%
Manufacturing, 14%
Wholesale and retail
trade, 17%
Transport, storage and
communication,10%
Services, 19%
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Source: Frost & Sullivan, 2011
• Economic reforms, attractive mining sector
policies and increasing infrastructure
development have generated sustained
economic growth rates in Mozambique
• The mining industry contribution to
Mozambique’s GDP is expected to increase
from 3.0 percent currently to 7.0 percent by
2015
Mining and quarrying, 3%
Electricity, gas and water, 5%
Construction, 3%
3.0% of GDP
$6.12 billion invested
between 2000 and 2010
Mining Foreign Direct Investment (MFDI) dominated total FDI in
Mozambique
Mozambique’s Coal Production Trends
40.9
23.6
32.7
25.9
35.7
0.0
10.0
20.0
30.0
40.0
50.0
25.0
30.0
35.0
40.0
45.0
50.0
Production ('000" Tonnes)
Coal Production ('000' Tonnes) Production Growth Rate (%)
• Mozambique’s coal production
capacity is still very small compared to
neighbouring South Africa and
Zimbabwe
• Coal production output increased
sharply from 25,900 tonnes in 2009 to
35,700 tonnes in 2010.
• The development of Brazil’s Vale, Rio
Tinto and Ncondezi Coal Ltd coal
operations is expected to make
Mozambique the second largest coal
Coal Production Trends (Mozambique), 2006- 2010
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Source: Frost & Sullivan, 2011
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
5.0
10.0
15.0
20.0
2006 2007 2008 2009 2010
Coal Production ('000" Tonnes)
Mozambique the second largest coal
producer in Africa after South Africa
• Coal exports are projected to overtake
aluminium exports which traditionally
dominated the country’s mineral
export sales
• Mozambique’s coal production is
projected to grow sharply to 20 million
tonnes of coal per annum by 2015 with
Moatize (Vale) and Benga/ Zambeze
(Rio Tinto contributing the bulk of
production
Coal Development Projects: 2010 to 2015
Total Mining Projects Value Break Down By Project Stage
(Mozambique) 2010-2015
CommodityPre-
feasibilityBankable Feasibility
Construction Total
$ billion
Coal 5.607 0 1.538 7.145 billion
Aluminium 0 3.000 0 $3.00 billion
Tantalum 15 0 22 $37 million
Titanium minerals 0 0 280 $280 million
Iron Ore 540 0 0 $540 million
6,834
3,000
1,840
1000
2000
3000
4000
5000
6000
7000
8000
Total Project Value Break Down By Project Stage (Mozambique), 2011-2015
Pro
ject V
alu
e in $
bill
ion
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Gold 72 0 0 $72 million
Uranium 600 $600 million
Total ($) 6.834 3.000 1.840$11.675 billion
Vale (Moatize Phase 2)
Rio Tinto (Benga)
Rio Tinto (Zambeze)
$ 4 billion
Jindaal Steel & Power
$700m
$800m
$500m
$440m
Talbort Group/ Nippon Steel (Revuboe)
Major Coal Sector Projects (Mozambique), 2011 Aluminium
25.7%
Coal
61.2%
Gold
0.6%
Iron Ore
4.6%
Tantalum
0.3%
Titanium
minerals2.4%
Uranium
5.2%
0
Prefeasibility Bankable Feasibility Construction
Total Project Break Down By Commodity(Mozambique), 2011
Mining Industry: Expansion Projects (Mozambique), 2010-2015
Mozambique Coal Mining Sector: Expansion Projects
Project Name Project Owner Project Stage Project Details ValueExpected operation
Zambeze Rio Tinto Pre-feasibilityNew mine development
$800.0 million 2014
Moatize Project Coal of India Pre-feasibilityNew mine development
$400.0 million 2016
Benga Rio Tinto ConstructionNew mine development
$700.0 million 2011
Jindaal Steel & Power
Jindaal Steel & Power
ConstructionNew mine development
$440.0 million March 2012
New mine
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Capital expenditure is expected to rise sharply, as mining companies inMozambique, invest in developing mineral reserves, equipment purchases andupgrading mining infrastructure
Ncondzezi Ncondzezi Coal Ltd Pre-feasibilityNew mine development
$367.0 million Q4 2014/Q1 2015
Minas MoatizeBeacon Hill Resources
ConstructionExisting mine expansion
$38.0 million 2012
Minas de RevuboeTalbot Group, Nippon Steel,
PoscoPre-feasibility
New mine development
$500.0 million September 2013
Tete West Mozambi Coal Pre-feasibilityNew mine development
$300.0 million 2015
Moatize Phase II Vale Pre-feasibilityExisting mine expansion
$4 .00 billion 2014
Key Industry Challenges
Insufficient Transportation Infrastructure
Environmental Concerns
Port Capacity Constraints
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Key Industry Challenges
Electricity Supply Shortages
Water ShortagesLack of geological data on
reserves
Regulatory Concerns
Mozambique’s Coal
Highly prospective geology
Market Drivers for Mozambique’s Coal Mining Sector, 2011-2015
Market Drivers
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Mozambique’s Coal Mining Sector
High inflows of foreign direct investment
Rising demand for coal
Business Friendly Environment
Robust Economic Growth
Skills Shortage
Market Restraints for Mozambique’s Coal Mining Sector, 2011-2015
Market Restraints
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Mozambique’s Coal Mining Sector
Evolving MiningLegislation
Volatile Global Demand
and Supply Factors
High Cost of Entry
Conclusion
Conclusion
Mozambique positioned tobecome significant coking coalproducer in the next 3-5 years
Opportunities
Infrastructure upgrade will openup opportunities for constructionand engineering companies
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Growth in international coalconsumption to drive long-termexport growth and growth of theMozambican economy
Mining industry to create 20 000additional jobs between 2012 and2015
Supply of miningconsumables, banking, miningequipment and related services
Mining to spur growth of othersupporting industries inMozambique e.g.telecommunications and powergeneration
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Christie Cronje
Corporate Communications
Africa
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Mining
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