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Talking Tete—Mozambique’s new mining epicentre

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Strategically located on Africa’s eastern seaboard, Mozambique’s ports provide ample access to the growing economic giants of Asia and with an abundance of untouched mineral resources, the country is attracting the attention of global investors.

Having overcome the horrors of a civil war that lasted from 1977 until 1992, its economy is growing rapidly and is propelling the country into the 21st century.

The inland Tete province, home to a plethora of untapped mineral resources and an abundance of coal and iron ore deposits, is benefiting from investor interest both at home and abroad.

The province’s vast potential has led to overwhelming interest from many companies, and as Ben James, managing director Western Australian mining house Baobab Resources, says, “by 2025 Tete could be producing 25 per cent of the world’s coking coal.”

Drawing in the big hitters

During IRJ’s expedition to unveil the economic potential in Tete this issue we also met Riversdale Mining; the company Rio Tinto acquired a majority interest in throughout the last few months, which owns the Benga project and the Zambezi coal projects— significant tier one coking coal plays. Another company, now hailed for its role as a first-mover in the burgeoning resource rich region, Beacon Hill Resources, is also firmly footed in Tete. It owns the only currently operating coal mine and has big plans to maintain this early lead, as well as expand on its current activity, during the next year.

BHP Billiton, Vale, African Eagle and Chinese-owned Globe Metals and Mining are some of the other major names making inroads into the African republic.
It is not surprising to see such plans and capital commitments related to infrastructure, given the arrival of so many top miners:

“When we saw Rio Tinto making a grab for Riversdale we really believed this rubber stamped the infrastructure story in Mozambique,” Baobab’s James says.

“I don’t believe that Rio would be buying up stranded resources  they must see that the route to the coast is viable.”

Riverside has certainly proven that in Mozambique’s potential there lies reward, and as managing director Steve Mallyon says, “the coal quality here is proven, as is the technology we’ve used which we’ve pioneered at Benga. What we really need to do now is find the optimum logistics solution and we think that river barging will be it.”

Riversdale’s activities, particularly at the mouth of the Zambezi, have helped to create jobs for locals with approximately 70 per cent of the company’s barging team made up of local employees.

“The key benefit to the country is that we create a new transport corridor,” adds Mallyon. “When you compare river barging to rail or trucking, it’s less than one third of any other alternative form of transport in carbon emissions.”

“From an environmental perspective we think it’s the best option to transport those large amounts of coal out of Mozambique.”

As Riversdale and Rio have continued to command international mining headlines, their staunch commitment to social development and environmental standards has been a key part of the success story.

Down to logistics

Baobab’s James says that the company and its directors were initially drawn to the country because of its geology, having recognised that there is the same prospective geological terrain that has been exploited in neighbouring countries, but almost no modern exploration companies.

“In Tete we’re talking about a coal basin that has the potential to dwarf the likes of Australia’s Bowen Basin,” he says.

The country’s growing mining industry requires related spending on infrastructure to become export-operational, and the government is listening to those investing in the country and taking a proactive stance towards the concerns of big business.

“The Ministry for Mineral Resources is very proactive,” James notes. “There’s nowhere else where I’ve worked where within 24-48 hours’ notice you could be sitting opposite the Minister of Mineral Resources and discussing developments at your project and issues that you’re encountering. She wants to have her finger on the pulse which is great and it is a proactive attitude that is a result of the big hitters entering the country.”

Tete’s location on the banks of the Zambezi River has provided the province with plenty of electrical supply from hydropower dams located along the waterway, and also the barging option for future moving of product that Riversdale’s Mallyon details. In the case of Riversdale’s projects, partner Rio is the leader when it comes to rail and barging, with masses of global experience to demonstrate its capabilities in sourcing the best logistics options. Along with Vale, Riversdale and Rio are developing one of the largest coal plays on the globe, and for the less dwarfing in size, such as up-and-running Beacon Hill, rail upgrades scheduled for completion by the end of the year and the proximity of the shallow port of Beira, already make for favourable exportation landscaping.

Tete will be a major mining and industrial centre within the coming decade, and as emphasised by players in the region this issue, the importance of this cannot be underestimated. Logistics and infrastructure works are underway, carrying with them economic and social benefits for the region while remaining mindful of environmental impacts, and Tete looks set to be the conjugate for a lot of future bulk commodities making their way to the coast.

Mozambique has risen from the ashes of civil war to become home to one of the continent’s fastest growing economies, and with Tete’s huge potential the future looks bright for this southern African republic.

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