One of National Development Corporation’s mining partners, Tancoal Energy Limited which is a subsidiary of Australian based Intra Energy Corporation, seems to be relocating to Mozambique gradually because of unfavourable conditions in the country, The Guardian Tanzania reports.
Tancoal which has invested billions of shillings in coal mining equipment in Ruvuma Region also employs hundreds of Tanzanians. The company which is struggling to sell its coal both locally and in neighbouring country markets, is struggling to pay debts both to local subcontractor, Caspian Construction and a supposed tax backlog to Tanzania Revenue Authority which it is disputing.
In its latest annual report, Tancoal Energy which is jointly owned by NDC with 30 percent and IEC with 70 percent said sales have also continued to plummet due to the coronavirus outbreak and competition from small scale miners.
“Tancoal sold 21,912 tonnes of coal in October 2020 compared to 56,209 tonnes sold in October 2019. Sales continued to be lower due to the effect of Covid-19 on the business of both domestic and export customers and competition from small miners,” the company said in the report.
The Dar es Salaam based mining firm further noted that production was 18,597tonnes, compared to 51,512tonnes during the same period adding that currently, it has sufficient stocks to meet market demand.
“Discussions continue with the Ministry of Minerals for a moratorium on the assessment for past charges for royalty on transport to customers’ business premises and discussions are also continuing with the former contractor, Caspian, to extend the payment plan for the three final payments due to tight cash flow from lower sales,” the company stated.
The company noted that while discussions are continuing, Ministry of Mineral’s Mining Commission is threatening cancellation of its pending application for two mining licences for coal at North Mburya, approximately eight kilometres north of the current Mbalawala mine.
“The lower quality coal from this area was planned to be blended with high quality coal from the Mbalawala operation, it had previously been reserved for power station feed. Further to these discussions the Mining Commission has threatened to cancel Tancoal licenses if royalty payments are not made, which is contrary to discussions with the Ministry to extend royalty terms,” the company lamented.
Commenting on the latest developments, IEC’s Chairman, Graeme Robertson said, “I am pleased that Intrafrican Resources Limited, IEC’s wholly owned subsidiary, is launching its capital raising efforts in November through private placements. The capital raise is for US$2.5M to enable IRL to own a majority of shares in IML with the aim of funding the exploration and development of the Minas Do Lurio Gold Project in Mozambique.”
Robertson said early production is expected from dredging at the Muteger Site, a confluence of the Lurio River streams thought to host a potential gold trap.
“As can be seen from the October survey report, gold is much wider dispersed than at first considered and is being recovered by artisanal miners from shallow diggings. Over time the river bed would have changed course and further finds are expected from old riverbeds,” he added while adding that due to an Islamic insurgency in northern Mozambique along the border with Tanzania, there is military action in the area.
This area is adjacent to the huge gas developments offshore Mozambique where Total and Exxon Mobil are looking to develop the country as the third largest producer of liquefied natural gas in the world by the end of the decade which makes it a prime target area for the insurgents.
This area is 250 kilometres north of the Minas Do Lurio Gold Project which is in a mainly Christian area with the regional capital of Pemba being 62km north of the area and it is difficult to imagine the terrorists turning south with very limited vehicles and walking 250km to pan for gold in the Lurio River.