According to government forecasts, Mozambique is expected to be mining 50 million tonnes of coking and thermal coal annually by 2020. This will place the country amongst the world’s five largest exporters for coking coal. Andrew Woodley, Managing Director at Rio Tinto Coal in Mozambique spoke to us about the company’s current projects and what it takes to establish an economically, socially and environmentally sustainable mining industry in Mozambique.
IMM Events: Rio Tinto Coal Mozambique manages 100% of the Zambeze project. Can you give us a status update on the project progress?
Andrew Woodley: We are currently finalising the Zambeze mining contract with the Government. Development of Zambeze will be dependent on an internationally-competitive coal chain capacity becoming available, and global economic conditions improving.
IMM Events: The lack of adequate infrastructure in Mozambique has been cited as a hindrance for major resources projects. How would you evaluate the current situation?
Andrew Woodley: It is widely recognised that the availability of rail and port capacity is a critical issue. I acknowledge that there is much effort being put to this task at the present time by Government and various industry participants and developers. Rio Tinto is continuing to engage with Government and industry partners to identify a long-term infrastructure solution to move the coal from the mine to port, that will deliver sufficient capacity and globally competitive outcomes.
Without such an outcome, much of the coal in the Moatize basin will remain in the ground. That would mean the benefits to Mozambique would be missed. It will be important to ensure that the coal chain solution is developed together with a realistic view of the coal production volumes that will come from the basin.
IMM Events: What are the key factors that will determine a sustainable and globally competitive coal business in Mozambique?
It is critical that we build a sustainable and well respected industry made up of globally competitive mining and associated businesses. We must have the full support of our host government and communities. This only comes if we earn this respect and support. To achieve this we need to achieve:
- Health, safety and environment practices that ensure our people are remain safe and that presence of mining activity is supported by regulators and communities.
- Positive community engagement delivering operations that exist with the support of, and benefit from mining activity.
- Strong stakeholder relationships to ensure:
- Economically viable long-term infrastructure solutions to get coal to market.
- Local capability building (human resources and companies) that leverage the opportunities associated with mining for the benefit of regional development.
- The development of globally efficient mines that are profitable and sustainable to ensure the products are competitively placed in the global market
- An efficient coal chain solution that delivers reliable capacity at globally competitive rates, again to ensure the coal products delivered to market are attractive to customers and survive all phases of the commodity price cycle
- Knowledge of the coal resource potential in the basin and volumes that can meet commercial and quality expectations in a global market
- A supportive investment environment in a global and regional sense.
These factors must be balanced with shareholders earning a positive return on the capital they invest, as well as ensuring that long term benefits flow to the people of Mozambique.
IMM Events: Rio Tinto is working closely with host communities as part of establishing your business in the region. Can you tell us about your activities? Do you see a growing importance for effective community relations when it comes to sustainable project delivery?
Andrew Woodley: We aim to establish a safe and globally competitive coal industry which can contribute to the prosperity of Mozambique. We aim to do this by building effective and sustainable community development opportunities. For example, our Local Business Centre in Tete aims to create links between RTCM and local suppliers, provide training to build capacity for local SMEs, and establish partnerships to achieve sustainable community projects.
Training and education are also very important to this approach. The mining industry needs a skilled and diverse workforce, yet given the relative newness of large scale mining in Mozambique we can’t expect that it exists already. It is therefore up to all of us, as an industry, to build the skills and capabilities needed locally – and in doing so, build community skills and capacity for other types of work. We need to invest in people’s employability so that communities are well-positioned into the future, long after mines have come to the end of their life. Our Training Centre in Tete has to date trained more than 2450 professionals in general civil construction courses, while we have higher education partnerships that are enabling us to train and award scholarships to technical professionals including geologists and mining engineers.
IMM Events: You will be presenting at the 4th annual Mozambique Coal & Energy Conference in July. What insights are you hoping to gain from your participation?
Andrew Woodley: Mining is still a relatively new industry to this country. Rio Tinto hopes that our participation and discussion of establishing a coal mining operation in Mozambique can help promote awareness of not just the challenges, but the achievements that we are making, especially where these align with the Mozambican Government’s own objectives in areas such as social development and education.