Government and Kingho Group sign coal contract

Maputo, 14 Nov (AIM) – The Mozambican government on 14 November signed an agreement with the Chinese Kingho Energy Group to open a coal mine at Mufa, in Marara district, in the western province of Tete.

The agreement was signed by the Minister of Mineral Resources, Esperanca Bias, and Kingho representative Zhao Jun Zuang.

The concession area covers 8,000 hectares about 45 kilometres west of Tete city. The geological surveys undertaken show the presence of 504 million tonnes of coal: 54 per cent of this is coking coal and 46 per cent is thermal coal.

The mine is relatively small, involving a total investment of US$1.46 million and is projected to produce five million tonnes of coal a year. Unlike all the other coal mines operating or approved in Tete, the Kingho mine will be underground rather than open cast.

It will be operated by Kingho (Mozambique) Investment Co. Ltd. 80 per cent of this company is owned by the Kingho Group, and the remaining 20 per cent by two Mozambican state companies, Mount Binga, and the Mozambican Mining Exploration Company (EMEM).

It expects to create the curiously precise number of 1,471 jobs for Mozambicans, not only in mining, but also in the administration and management of the company.

Kingho says it has already spent US$10 million on 100 scholarships for Mozambicans in China. They are studying geology and other earth sciences.

According to Zhao, the company is waiting for the Environment Ministry to provide the necessary environmental licence. When that has been granted, work will begin on opening the mine, and he expected production to begin by mid-2015.

Zhao expected the coal to be exported, but the logistics of this are not yet clear. By late 2015 railways should be available from the Moatize coal basin in Tete to the ports of both Beira and Nacala. But the coal must first be trucked from the Mufa mine to the railhead at Moatize, a distance of around 50 kilometres, which will add considerably to the transport costs.

Bias said the government hopes that coal companies operating to the west of Moatize will develop “alternatives to road transport”.