Coal news and updates

ICVL Mozambique to cut 2016 coking coal output

Reeling under losses in view of the sharp fall in coking coal prices since more than a year, International Coal Ventures Ltd (ICVL) is believed to have decided to cut its coking coal production from the Benga mine in Mozambique by a massive 65% in 2016, a company official said.

The company, which produced about 1.14 million tons (mt) of coking coal from Benga mine in 2015, is planning to produce only about 0.4 mt in 2016, the official said.

The company will, however, consider increasing production if coking coal prices firm up to around $100 levels, the official indicated.

ICVL, jointly promoted by India’s five leading public sector undertakings – SAIL, NMDC, RINL, NTPC and CIL – had acquired 65% stake in the Benga mines from Rio Tinto in 2014 for $40 million.

Another Indian steel major, Tata Steel Ltd, holds the balance 35% in Benga.

According to the official, the total production or run of mine (ROM) coal at Benga in 2015 stood at 3.6 mt of which 0.35 mt was steam coal, 1.14 mt coking coal and the balance, coal rejects (tailings).

“We have to enhance production from the Benga mines in future but, as the market has been subdued for the last many months, we have planned to produce 0.4 mt of coking coal and, accordingly the ROM, in 2016,” the official said.

“This is with the purpose that we will have one shipment every month so that mining also continues, though at a lower scale, and we do not need huge money to sustain production levels,” the official added.

The entire production of coking coal volume from Benga (around 90,000 tons per month till 2015) is currently going to SAIL and RINL at some discount to the benchmark FOB Australia price.

Coking coal price in international markets had slipped to $73 per ton FOB Australia in November 2015 but improved after December 2015 and is currently ruling at around $80 per ton, according to data available with ICMW.

Much of the gains in coking coal prices came only during the last few days, taking a cue from the spurt in iron ore prices on expectations of a slight increase in Chinese demand, industry sources said.