Various Moz mining projects making progress

24th November 2017 By: Keith Campbell - Creamer Media Senior Deputy Editor

The Mozambique government has approved a resolution authorising Capitol Resources, a subsidiary of British miner Baobab Resources, to undertake mining and related operations in the Chiúta district of Tete province, according to a statement by Cabinet spokesperson Armindo Ngunga. The planned activities include the mining of iron-ore and the production of steel. “The contract is valid for 25 years, capable of renewal and subject to fixed conditions, in accordance with government’s plan,” he said. Mozambique news agency AIM has reported that the project includes the construction of a steel plant and a thermal power station.

Capitol Resources has its head office in Maputo, while parent group Baobab is based in London. On its website, Baobab states it is “wholly focused in Mozambique, where it has discovered and defined a 759-million-ton Joint Ore Resources Committee-compliant iron-ore resource in Tete province, one of Africa’s fastest-growing mining, logistics and industrial centres”. Through Capitol, it is developing the Tete iron and steel project, in which the International Finance Corporation holds a 13% share.

“The Tete iron and steel project is ideally positioned at the confluence of all iron and steelmaking raw materials of iron-ore, coal, power and water,” affirms Baobab. “By leveraging the project’s unique access to these resources, Baobab intends to establish a vertically integrated mining and steel-making operation, producing steel products to supply the industrial, commercial and urban growth in Mozambique, as well as regional end markets.”

Quite separately, five Chinese companies with prospecting and exploration licences are carrying out studies to establish the scale of mineral deposits in the Eráti district of Nampula province, the Macauhub news agency has reported. The companies are exploring for quartz, garnet, corundum, limestone, tourmaline, aquamarine, ironstone and gold.

Meanwhile, another British company, Ncondezi Energy, has announced that it has signed a nonbinding offer (NBO) with China Machinery Engineering Corporation (CMEC) and General Electric South Africa (GE); the signing followed on from a late October announcement that the three parties had reached an in-principle agreement on the terms of an NBO. The intent of the NBO is to allow the start of exclusive talks regarding the development, construction and operation of Ncondezi’s integrated openpit coal mine and 300 MW coal-fired power station project in Tete province. The power to be generated by this plant will be sold on the domestic market, used existing but reinforced national transmission capacity.

“CMEC and GE were selected as preferred partners to develop the Integrated [Mine/Power Station] Project, owing to their leading experience in the energy sector and specific experience developing projects in Mozambique,” stated Ncondezi in its press release. Through the NBO, the miner has awarded CMEC and GE the exclusive right, until April 30 next year, to enter into a binding Joint Development Agreement (JDA) and tender for the project’s engineering, procurement and construction, and operation and maintenance, contracts for the project. CMEC and GE can terminate the NBO following due diligence, if they desire; and Ncondezi can do the same if CMEC and GE fail to meet agreed timelines.

The NBO was signed at a formal ceremony in the Chinese capital, Beijing. “During the visit to Beijing, the parties also updated the work programme and timetable to complete the project due diligence and, if successful, to conclude the JDA, and the appropriate responsibility and resource allocations were agreed to with a view to ensuring key deliverables will be met within the target timeframes,” reported Ncondezi.

The company intends that this 300 MW project will be only the first phase of a programme that will be developed in stages. The intended final stage would see the company having a total generating capacity of 1 800 MW.