Intelligent news from Mozambique

Vale Mozambique mines yield lower-value coal so far this year

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A drastic drop in the volume of metallurgical coal mined by Brazil’s Vale in the Mozambican province of Tete in the first half of this year was largely cancelled out by an even bigger increase in lower-value thermal coal production, the company’s latest report shows.

Total coal production fell 3.1% to 5.3 million tonnes in the first six months of 2018 compared with the same time last year – but the volume of higher-value metallurgical coal, used in steel production, fell 19.6%, while thermal coal volumes jumped 30.9%.

Vale 2Q18

Source: Vale’s production and sales in 2Q18

In April, Vale cut its 2018 coal production forecast in Mozambique from 16 million tonnes to 15 million tonnes, citing power outages and flooding due to severe weather conditions at its two mines in the town of Moatize, and industrial action over unpaid bonuses in December 2017.

To even hit that lower target, however, Vale will have to produce almost as much as it did in the whole of 2017, when it mined just over 11 million tonnes – which set a new record for the company’s Mozambican operation.

Last month, the company promised a parliamentary commission that it would suspend mining if pollution reached unacceptable levels in Moatize. One of the commission members who lives in Moatize said, however, that Vale would have to relocate the whole town, or stop mining, for pollution to reduce to acceptable levels.

Thermal coal production in the second quarter of 2018 topped 1.3 million tonnes, compared with just under one million tonnes in Q2 2017. Metallurgical coal production in Q2 2018 was 1.56 million tonnes, down from 2.05 million tonnes in Q2 2017.

Vale said the lower production compared with Q2 2017 “was mainly due to the difference in the coal seams fed to the plants.”

However, the company said it had taken delivery of new trucks and excavators over the last three months, which “are being assembled to support the increase in production volume in H2 2018.”

© 2018, Zitamar Ltd. Reproduction and dissemination prohibited without written permission.

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