2010-07-27 17:37:03 - Mozambique Mining Report Q3 2010 - a new market research report on companiesandmarkets.com

Mozal to face higher energy charges
In May 2010, Mining Weekly reported on news that South Africa’s Eskom had renegotiated its energy supply contract with BHP Billiton’s Mozal aluminium smelting subsidiary, effective from March 31 2010. The new contract reportedly uncouples the price Mozal pays for its energy supply from both the global price of aluminium and the prevailing ZAR/US$ exchange rate. Mozal now has to bear both the commodity and exchange rate risk. Nevertheless, BHP Billiton is confident that Mozal can remain profitable, despite its higher energy input costs.

New Data
For 2010, we have made significant changes to the way in which we forecast mining data. As well as using local statistics agencies and associations, we now also draw

 

 

on the expertise of the UN’s Industrial Commodity Statistics Database, the US Geological Survey and the World Bureau of Metal Statistics for our historical export and production data. We then forecast this data using our own proprietary econometric model. Human intervention also plays a necessary and desirable role in our mining forecasting; experience, expertise and knowledge of industry trends and developments ensuring that we can spot likely future changes and anomalous data that a purely mechanical model would not.

Country Overview
Mozambique is rich in mineral resources including coal, gold, iron ore, titanium and vanadium among other minerals. The company is also home to the Mozal aluminium smelter. There are several high-profile mining projects underway in the African nation, including Vale’s US$1.5bn Moatize coal project and Riversdale Mining’s US$800mn coal project.

Industry Forecast
Mozambique is in the process of developing its rich endowments of titanium and coal in particular. We believe that the scene is set for quick sectoral growth across our forecast period to 2014. Areas that need to be addressed by the government include the tackling of corruption and improving infrastructure. We believe that the Mozambican mining sector can reach an average annual growth rate of almost 10% across our forecast period. Many new mining facilities are scheduled to start production over the coming years, which should boost overall output levels.

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