Major Benga expansion on the cards

RIVERSDALE Mining and joint venture partner Tata Steel have upped the reserves of the Benga mine in Mozambique by 84% to 502 million tonnes, allowing a fast-track expansion to 20Mt per annum of raw coal output.

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Measured coal resources were also increased by 126% to 710Mt for the coking coal mine which officially opened a month ago.

The completion of stage one development to reach 5.3Mtpa of run-of-mine coal is due in mid-2011 while the stage two feasibility study is targeting 10.6Mtpa of ROM coal by 2014.

With the coal reserves boosted, Riversdale said the JV was committed to a stage three feasibility to expand to 20Mtpa of ROM production.

Riversdale executive chairman Michael O’Keefe said the stage three expansion would result in a combined 10Mtpa of export-quality thermal and coking coal.

He added this output would produce sufficient thermal coal to supply the planned development of the 500-megawatt Benga power station.

The proposed mine-mouth power station aims to deliver this payload of electricity in 2013 but could also be upgraded to 2000MW.

Total coal resources at Benga now just exceed 4 billion tonnes, with 18% in the measured category, 9% indicated and 73% inferred.

Tata Steel managing director Hemant Nerurkar said the Benga mine had the potential to be a major producer of premium coking coal products for global markets, including India.

Benga will export the coal using the recently completed Sena rail system which links up to a refurbished coal loader at Beira’s port.

Last year, the Mozambique government started a tender process for a dedicated 20Mtpa coal-loading terminal at the port.

Riversdale will also investigate barging coal along the Zambezi River.

Export quality coking coal

Riversdale said recently completed independent coal quality tests with large steelmakers confirming Benga coking coal was the equal of quality Bowen Basin coal produced in Queensland.

“North Asia, India, Brazil and Europe will be targeted as the main markets into which coking coal will be sold under long-term contracts,” Riversdale said.

The Benga premium coking coal product is considered to have higher ash and sulfur levels, but the low alumina levels are expected to result in similar slag volumes to benchmark coking coals.

The premium product is estimated to have a coke strength after reaction value of 68 with 10.5% ash and 0.83% sulfur.

The first batch testing of Benga coke had a CSR value of 71 last year.

The JV is aiming at keeping a longer-term contract pricing system despite this year’s trend to move into quarterly coking coal contracts.

Tata Steel owns 35% of the JV and will firm up coking coal supply through Benga.

Riversdale shares closed up 5c to $9.03 today.

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