Vale Moatize II Expansion Project
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le Moatize ii sion project
g one of the largest coal reserves in the rld while investing in local infrastructure
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he southern state of Mozambique is one of Africa’s good news stories. Since gaining independence from Portugal just over 40 years ago, the country has grown at a remarkable pace. GDP growth between 1996 and 2006 averaged just over 8%, and continued at a rate of over 6% between 2006 and 2011. Anyone who has ever visited the country’s capital, Maputo, will be greeted by murals proclaiming ‘a luta continua’ the Portuguese for ‘the struggle continues,’ a sort of unofficial national motto taken from its independence movement. These days, a better motto might well be ‘the progress continues,’ given the huge strides the country continues to make. The Moatize Project, located in the northwestern province of Tete, exemplifies this progress. Operated by Brazilian mining firm Vale, it is one of the largest coal reserves in the world. The news that Vale has decided to increase production at the project not only represents a huge vote of confidence in Mozambique, but also represents a huge boost for the country’s foreign direct investment. Vale in Mozambique: 2004 to Moatize II Brazilian mining giant Vale is present in over 30 countries worldwide. It first arrived in Mozambique in 2004, when it gained the concession for Moatize, the country’s highlyprize coal reserve. At over 11 million tons of production annually, the coal mine has come to represent one of Vale’s most valuable assets and the investments that it has made in the project have added value not only for the company but the country as a whole. Its importance to Vale is emphasized by the fact that it divested large
Australian operations to invest instead in Mozambique, which it considers to be higher quality coal. A good place to see how this investment has made a difference to the country is its infrastructure. Raw materials like coal require a significant transport and logistics infrastructure to bring the product from the mines to the end customer. Vale made the necessary investment in railway infrastructure, so that in 2011, the first train left the coal mines at Moatize for the Port of Beira carrying 2,100 metric tons of coal. At the time, the railway line linking the town of Moatize to Beira had been out of service for a total of 30 years. In fact, Vale’s presence has been something of a boon for the country’s infrastructure as a whole. While it always
looks to make a lasting contribution to a country’s transport network, Mozambique has benefitted more than most both because of the requirements of Moatize, but also because of its relatively low starting point over a decade ago. In addition to the Moatize-Beira line, the company can point to investments in the Nacala Corridor, a 912 km railways running from Moatize through Malawi and the port at Nacala, where it has a coal export terminal. Then, there’s the Moatize Employment Centre, an eight km section linking National Highway 7 to Cateme, Cateme Market and the area’s Water Supply System. The good news for Mozambique is that the investment continues to grow apace. The second phase of the project at Moatize (known as “Moatize II”), will see the output at the mines increase to 22 million metric tons annually and an estimated total investment of just over US$2 billion. With an output of 11,000 tons, the company already employs a massive 18,000 people – making it the second largest private employer in the country. The new operations will inevitably lead to a significant increase in these numbers and improvements are already being witnessed across the board. For example, Vale reports that the ramp-up of the Nacala Logistics Corridor is going according to plan. In the second quarter of 2016, it doubled the amount of freight it carried on the same period one year before. And Moatize II has only just begun production, bringing total mine monthly mine movement to a new record of 12.7 mt due to higher equipment productivity and the development of new mining areas to supply the Moatize II coal handling and processing plant.
“Beyond mining.” With the direction of Márcio Godoy, Global Director of Coal, Vale’s team sums up the impact of Vale in Mozambique to date by stating: “Mining, done in an inclusive way, like in the Nacala Corridor, goes beyond mining: it brings benefits that help integrate the necessities of the region… We need to think about the impact of our activities at the regional level, at a SADC level (South African Development Community) and also at a community level.” Vale has also committed to offering 10% of Vale’s shares to the local market, which gives the citizens of Mozambique a share in the success of the company. The government already holds 5% of the shares through its holding company, “Empresa Mocambicana de Exploracao Mineira” (EMEM), and an extra 10% will be made available to the public, in what Vale calls: “the most embracing way possible,” which will include the stock market, pension funds and other channels. Vale’s commitment to hiring locally in Mozambique also
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contributes to rising living standards in the country. “Our concern is to educate the local youth: nearly 86% of our direct workers are Mozambicans, the young individuals we have recruited in Moatize are the operators of the largest equipment in all of Africa.” This includes university programs and partnerships with local institutions and training courses. The team continues: “the community is treated as part of our existence.” Thankfully, this includes females in the population, who Vale are helping to break the glass ceiling with their strict policy of gender equality. Vale also works actively to protect the local environment. It has created a structured environmental management
program, and maintains two native tree nurseries, as well as investing in water and air quality control programs, waste treatment and monitoring of marine diversity. The company also has long-term planning for closing mines like those at Moatize, in the most sustainable way possible. Mr. Godoy notes: “We have a slogan that reflects this thinking: there will not be a future without mining, and there will not be mining without thinking of the future. A network of partnerships Vale has engaged a number of local and international partners in Mozambique, which have helped it to maintain
its remarkable growth trajectory since 2004. It has worked closely with an organization called The Community Insights Group, which had enabled it to develop close working relationships with over 40 local suppliers, in turn developing industry-ready skills across a range of projects in Mozambique. Primary among its international partners is Minopex, the South African mining operations and maintenance contractor, which has been present on the Mozambique market since 2011. Minopex’s versatility, as well as its commitment to safety and the environment are the features which initially attracted Vale to the firm. Minopex have worked on commissioning and training for Vale at first phase of Moatize and are now being brought on board for Moatize II. Already a highly respected player on the Mozambique market for the work it has done with Vale and other partners, Minopex developed a management quality system called FASTIR (an acronym for Focused, Accountable, Safety, Techology, Integrity and Respect), which has raised the bar even further for firms of its kind in Mozambique. In addition, its new engineering arm, ENSERMO, will provide firms like Vale and others, the kind of specialized engineering services that have been nearly impossible to cater for until now. Elsewhere at the international level, Vale’s partners include Kentz Engineering – a nearly ubiquitous presence in largescale mining projects. Kentz has already assisted Vale in phase I of the Moatize project and will now be responsible on phase II for providing all structural, mechanical, electrical, instrumentation and
piping construction services. Meanwhile, the conveyor belts at Moatize II will be the responsibility of the African Trading Group, while Finnish engineering technology firm Metso will develop the project’s technically sophisticated pumps. Other international partners include Australia’s Ausenco – which is worked on a ‘optimize phase’ extension at Moatize, and Italy’s TechInt Group, which will take care of a Rapid Load Out Station (RLOS) for Vale’s Moatize II iron ore project in Mozambique. Each of the partners past and present not only brings something different to the Moatize II project, but also brings international expertise to Mozambique, and experience to its young workforce, ensuring that the investment is felt long into the future.
A legacy Despite the remarkable statistics churned out by Moatize II, the team sees it as just part of a wider legacy for Vale in Mozambique. “We understand that mining must leave a legacy, not only for development but also leave a legacy of social responsibility for future generations. This means that we must leave an environment in which other activities and be carried on for future generations, which can substitute mining. The earnings of the mining activity must guarantee that future generations develop and keep the standards they have achieved. Now might be a good time to revise Mozambique’s unofficial motto to “o progresso continua”: The progress continues.
Oliver Moy Publisher For enquiries email okm@aubusinesscoverage.com