Mozambique: Key role in energy transition, gas reserves worth $100 bln - Deloitte
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The Economist Intelligence Unit (EIU) yesterday said that the increase in coal production at the Moatize mine reinforced the view that this raw material was the main driver of Mozambique’s economic growth.
“The latest production figures reinforce our view that coal is the main driver of Mozambique’s economic growth,” write the experts of the economic analysis unit of the British magazine The Economist.
In an analysis of coal production in Mozambique, analysts say that “the accumulated production up to the third quarter in Moatize shows a growth of 38.8 percent compared to the first nine months of 2016 and an increase of 5.8 percent over the third quarter of last year, and indicates that strong growth in coal exports in the first half of 2017 continued through September”.
On October 19, Brazilian mining company Vale announced that coal production in Mozambique reached a quarterly record of 3.2 million tonnes in the third quarter of the year and that its logistics operations in Mozambique reached a record volume of transport, reaching 3.5 million tonnes in the third quarter, 15 percent more than in the previous three months.
“Moatize is technically capable of producing 22 million tonnes per year, which would mark a significant increase compared to the 12 million that Vale expects to produce in 2017,” write the Economist analysts, although noting that doubts about achieving this figure did exist.
“Although we doubt that the annual production of 22 million tonnes will be achieved in the medium term, we expect a considerable growth in the coming years, which means that there will be a substantial increase in export revenues in a country facing economic difficulties,” they said.
Production capacity, however, faced difficulties as regards investors, who would hesitate to move to new projects in the medium term.
“Prospective miners are constrained by transportation difficulties from Tete province to the coast and lower prices in the medium term, which are expected to fall from US$82 per tonne this year to US$70 per tonne between 2018 and 2020,” the EIU says.
Investors “should also be affected by the high media impact of ventures which have failed,” such as the case of Rio Tinto , which bought assets for US$3.7 billion in 2011 and eventually sold them for US$50 million, and is now facing a lawsuit for having “allegedly misled the shareholders in this disastrous business in Mozambique”.
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