VALE is to put its Mozambique coal mines on maintenance for three months, said Bloomberg News citing the Brazilian firm’s business plans. The move could close “the tap” on about a third of Mozambique’s export earnings, the newswire said.
The move could have severe implications for the Mozambique’s balance of payments and currency given the fact that at some $1.7bn in sales last year, coal was the country’s biggest source of export earnings, said Bloomberg. Vale comprised most of the fuel’s production.
Vale completed a review of its Mozambican coal mines and decided to shift the focus to producing more metallurgical coal, which is used to produce steel, and less of the lower-value product that power stations burn.
Under the new plan, the assets will produce at a rate of 15 million tons per year (Mt/y) by the end of 2020, up from less than 12Mt last year, but still well short of Vale’s target to export 22Mt from the mines in central Mozambique, said Bloomberg News.
Vale will this quarter write down the assets by $1.6 billion, said the newswire citing a Vale statement.