Bloomberg News

Vale CFO `Confident' Mozambique Coal Mine Will Happen

August 31, 2006

Cia. Vale do Rio Doce, the world's largest iron-ore producer, is likely to go ahead with a $2 billion coal project in Mozambique, Fabio Barbosa, the company's chief financial officer told reporters today in Sao Paulo.

The Moatize project envisions the production of both metallurgical coal, used in steel plants, and thermal coal, used in power stations, according to Vale and Mozambique officials. Some of the coal will be used in an associated power station. The project, which may become the biggest coal mine in the southern hemisphere, includes rail and port facilities.

``It's a project we have worked very hard on,'' Barbosa said. ``We are very confident about carrying out the investment, but we still don't have a decision from our board of directors.''

Roger Agnelli, 46, Vale's chief executive officer, is expanding the Brazilian company's coal-mining operations to sell more of the materials used by steelmaking clients such as ThyssenKrupp AG. Mozambique, 14 years after a civil war, wants to start coal exports and use power generated at Moatize to attract metal smelters and other companies to its $5.6 billion economy.

On Aug. 17, Estevao Rafael, a Mozambique-government official who sits on a panel reviewing Vale's feasibility study on the mine and the port and transport systems serving it, said Vale has decided to go ahead with the project.

Also on Aug. 17, Joel Mokgohlwa, chairman of Johannesburg- based Semane Consulting Engineers said Vale had signed a contract with his company to design a plant to process 21 million metric tons of coal a year from Moatize.

Vale preferred shares, its most-traded class of stock, fell 4 centavos, or 0.1 percent in Sao Paulo at 3:50 p.m. New York time.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net Andrew Barden in Sao Paulo at abarden@bloomberg.net

To contact the editor responsible for this story: Laura Zelenko in New York at lzelenko@bloomberg.net


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