Sunday, May 20, 2012

Brazilian group targeting more African opportunities

Brazilian diversified mining major Vale has confirmed that its portfolio includes investments of $7.7-billion in projects in nine African countries. Speaking at a recent seminar on Africa hosted by Brazil’s National Economic and Social Development Bank (better known by its Portuguese initials, BNDES), Vale CEO Murilo Ferreira reaffirmed the importance of Africa in his company’s strategy.

He highlighted that Vale continued to be interested in the continent and specifically cited coal and copper as sectors in which Vale continued to make investments in Africa. These sectors have the potential to grow Vale’s African business, he pointed out. 
“For example, our investment in Mozambique is high –” said Ferreira, “equivalent to a third of the gross domestic product of that country.”

However, he assured that his group had no intention of having an “imperialist” posture in Africa. “We want to come [to Africa] in a sustainable manner, augmented with social responsibility,” he stated. Vale is interested in supporting the development of local labour and working with local entrepreneurs to establish and develop local supplier networks for its projects in Africa. 
The African countries Vale is currently active in are Mozambique, Malawi, Guinea, Liberia, the Democratic Republic of the Congo (DRC) and South Africa.

Mozambique is the site of Vale’s biggest coal project anywhere – Moatize. This produced 620 000 t of coal last year (although only 140 000 t had been exported by December 31).

Phase one of Moatize will have an annual production capacity of 11-million tons, made up of 8.5-million tons of metallurgical coal and 2.5-million tons of thermal coal. 
Phase two will double these figures. Vale is also exploring for more coal in Mozambique as well as working on a phosphates project and is part of a consortium searching for natural gas in the country.

The Brazilian group’s activities in Malawi are tied to its Mozambican projects and focus on Malawi’s railway system – Vale owns 51% of Malawi’s Central East African Railways (the Brazilian company is a major railway operator in its home country). Vale intends using this rail network, which it will upgrade (and build one new line) to help ship coal from Moatize to the the Mozambican port of Nacala. 
(Currently, coal from Moatize is carried along the Sena railway line to the harbour city of Beira.)

In Guinea, Vale is developing the Simandou/Zogota iron-ore project. Zogota should start production this year, ramping up to a full production capacity of 15-million tons a year.

Simandou, when it reaches full production, will have an annual capacity of 50-million tons.

As is the case with Malawi, Vale’s interest in Liberia is a railway to convey the output of the mine to the coast. However, the railway from Simandou/Zogota to the coast will be a new construction and not the upgrading of existing lines.

The Brazilian group’s operations in the DRC and Zambia take the form of a joint venture with South Africa’s African Rainbow Minerals, called Teal Exploration & Mining (Teal).

Teal owns the Konkola North copper project in Zambia and the Kalumines copper project in the DRC. Konkola North is currently being developed and is expected to start production next year, with an initial output of 45 000 t of copper, increasing to a full annual capacity of some 100 000 t in 2015. Kalumines has been undergoing a feasibility study.

Meanwhile, in Brazil, Vale has exited the kaolin business by selling its 61.5% share in kaolin miner Cadam to US company KaMin for $30.1-million. Cadam has an openpit mine, a processing plant and private harbour. 
The mine/plant site and the port are linked by a slurry pipeline. Vale sold its only other kaolin operation, Pará Pigmentos, in 2010.

Edited by: Creamer Media Reporter