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Mozambique's Coal Mining Sector: Building for Boom


A presentation on Mozambique's coal mining sector.

A presentation on Mozambique's coal mining sector.

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  • 1. Mozambique’s Coal Mining Sector: Building Sector: for BoomWhy does Mozambique’s coal mining industry offer so much potential? Christy Tawii, Research Associate Mining 19 October 2011
  • 2. Today’s Presenter 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 Christy Tawii - Highly motivated and results driven Research Associate - A positive and professional work ethic Mining Career Highlights - Prior to joining Frost & Sullivan, I was a Projects Officer at Southern Hemisphere Consultants , a socio- Frost & Sullivan economic research firm in Cape Town, South Africa. I was involved in various tasks such as tender Africa management and coordination, proposal writing, evaluations (baseline assessments, situational analysis, Cape Town 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 2
  • 3. Focus Points 1 Overview of the Mozambique’s Economy: Mining Sector 2 The Mozambican Coal Mining Sector 3 Coal Development Projects: 2010 to 2015 4 Key Industry Challenges 5 Market Drivers and Restraints 6 Conclusions 3
  • 4. Overview of the Mozambique’s Economy: Mining Sector• Mozambique is one of the fastest growing economies in Sub Saharan Africa Transport, stora Services, 19%• In 2010, Mozambique’s economy grew by ge and Agriculture, For communication, estry, and 8.0%, from 6.4% in 2009. 10% fishing , 29%• Mozambique’s mining industry accounted for 3.0% of the Gross Domestic Product (GDP), but contributed 66.0% of the country’s Wholesale and retail Manufacturing, foreign currency earnings in 2010 trade, 17% 14% Mining and quarrying, 3% 3.0 % of Electricity, gas Construction, 3 GDP % and water, 5% Source: Frost & Sullivan, 2011 $6.12 billion invested • Economic reforms, attractive mining sector between 2000 policies and increasing infrastructure and 2010 development have generated sustained economic growth rates in Mozambique Mining Foreign Direct Investment (MFDI) dominated total FDI in • The mining industry contribution to Mozambique Mozambique’s GDP is expected to increase from 3.0 percent currently to 7.0 percent by 2015 4
  • 5. Mozambique’s Coal Production Trends Coal Production Trends (Mozambique), 2006- 2010• Mozambique’s coal production capacity is still very small compared to Coal Production (000 Tonnes) Production Growth Rate (%) neighbouring South Africa and 50.0 50.0 Zimbabwe 45.0 40.0• Coal production output increased 40.9 Coal Production (000" Tonnes) sharply from 25,900 tonnes in 2009 to 40.0 30.0 35.7 35,700 tonnes in 2010. 35.0 20.0 32.7• The development of Brazil’s Vale, Rio 30.0 10.0 Tinto and Ncondezi Coal Ltd coal 25.9 operations is expected to make 25.0 23.6 0.0 Mozambique the second largest coal 20.0 -10.0 producer in Africa after South Africa• Coal exports are projected to overtake 15.0 -20.0 aluminium exports which traditionally 10.0 -30.0 dominated the country’s mineral 5.0 -40.0 export sales• Mozambique’s coal production is 0.0 -50.0 projected to grow sharply to 20 million 2006 2007 2008 2009 2010 tonnes of coal per annum by 2015 with Moatize (Vale) and Benga/ Zambeze Source: Frost & Sullivan, 2011 (Rio Tinto contributing the bulk of production 5
  • 6. Coal Development Projects: 2010 to 2015Total Project Value Break Down By Project Stage (Mozambique), 2011- Total Mining Projects Value Break Down By Project Stage 2015 (Mozambique) 2010-2015 8000 Pre- Bankable Total Commodity Construction 6,834 feasibility Feasibility $ billion 7000 Project Value in $ billion Coal 5.607 0 1.538 7.145 billion 6000 0 3.000 0 $3.00 billion 5000 Aluminium 4000 Tantalum 15 0 22 $37 million 3,000 3000 Titanium minerals 0 0 280 $280 million 1,840 2000 540 0 0 $540 million 1000 Iron Ore 0 Gold 72 0 0 $72 million Prefeasibility Bankable Feasibility Construction 600 $600 million Total Project Break Down By Commodity(Mozambique), 2011 Uranium Tantalum Titanium Uranium 6.834 3.000 1.840 $11.675 0.3% minerals 5.2% Total ($) billion Iron Ore 2.4% 4.6% Major Coal Sector Projects (Mozambique), 2011 Gold Aluminium 0.6% Vale (Moatize Phase 2) $ 4 billion 25.7% Rio Tinto (Benga) $700m Rio Tinto (Zambeze) $800m Coal 61.2% Talbort Group/ Nippon Steel (Revuboe) $500m Jindaal Steel & Power $440m 6
  • 7. Mozambique Coal Mining Sector: Expansion Projects Mining Industry: Expansion Projects (Mozambique), 2010-2015 Expected Project Name Project Owner Project Stage Project Details Value operation New mine Zambeze Rio Tinto Pre-feasibility $800.0 million 2014 development New mine Moatize Project Coal of India Pre-feasibility $400.0 million 2016 development New mine Benga Rio Tinto Construction $700.0 million 2011 development Jindaal Steel & Jindaal Steel & New mine Construction $440.0 million March 2012 Power Power development New mine Ncondzezi Ncondzezi Coal Ltd Pre-feasibility $367.0 million Q4 2014/Q1 2015 development Beacon Hill Existing mine Minas Moatize Construction $38.0 million 2012 Resources expansion Talbot Group, New mine Minas de Revuboe Nippon Steel, Pre-feasibility $500.0 million September 2013 development Posco New mine Tete West Mozambi Coal Pre-feasibility $300.0 million 2015 development Existing mine Moatize Phase II Vale Pre-feasibility $4 .00 billion 2014 expansion Capital expenditure is expected to rise sharply, as mining companies in Mozambique, invest in developing mineral reserves, equipment purchases and upgrading mining infrastructure 7
  • 8. Key Industry Challenges Environmental Concerns Insufficient Transportation Port Capacity Constraints Infrastructure Lack of geological data on Water Shortages reserves Key Industry Challenges Electricity Supply Shortages Regulatory Concerns 8
  • 9. Market DriversMarket Drivers for Mozambique’s Coal Mining Sector, 2011-2015 Highly prospective geology Mozambique’s Coal Mining Sector Rising demand for coal High inflows of foreign direct investment Business Friendly Robust Economic Growth Environment 9
  • 10. Market RestraintsMarket Restraints for Mozambique’s Coal Mining Sector, 2011-2015 Skills Shortage Mozambique’s Coal Mining Sector Volatile Global Demand Evolving Mining and Supply Factors Legislation High Cost of Entry 10
  • 11. Conclusion Conclusion Opportunities Mozambique positioned to Infrastructure upgrade will open become significant coking coal up opportunities for construction producer in the next 3-5 years and engineering companies Growth in international coal consumption to drive long-term Supply of mining export growth and growth of the consumables, banking, mining Mozambican economy equipment and related services Mining to spur growth of other Mining industry to create 20 000 supporting industries in additional jobs between 2012 and Mozambique e.g. 2015 telecommunications and power generation 11
  • 12. Next Steps Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. ( 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2012: A Frost & Sullivan Global Congress on Corporate Growth ( Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities ( 12
  • 13. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by “Rating” this presentation. 13
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  • 15. For Additional Information Christie Cronje Stephane Gay Corporate Communications Account Manager Africa Environment & Building Technologies +27 21 680 3566 +27 21 680 3279 David Winter Research Manager Mining +27 21 680 3275 15