Indian steel companies finds alternative in Mozambique

VOLUME 5: ISSUE 5 MZN 125/US$5.30 OCTOBER/NOVEMBER/ DECEMBER 2017 Indian steel companies finds alternative in Mozambique Gold mining resume at Manica Concession 5 Rio Tinto reported for fraud in Mozambique 11 Study deliver positive results for Tanzania s Fungoni 17

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Contents EDITORIAL COMMENT Coal drives the economy, spurs growth potential :... 4 NEWS BRIEFS Balama s first production on time :... 5 Gold mining resume at Manica Concession :... 5 Montepuez redesign to save millions :... 5 Nacala corridor gets additional funding :... 5 Thai petroleum firm ready to export Rovuma gas :... 5 Vale, Mota-Engil sign a US$445 million deal :... 5 COVER STORY Indian steel companies finds alternative in Mozambique :... 6 GENERAL NEWS Continuous Improvement Drive Move To Reborn Equipment :... 7 Bell and Lonagro team up in Mozambique, Malawi :... 8 Incentives to Mozal bleed government coffers :... 9 Moma achieves record ilmenite production :... 10 Rio Tinto reported for fraud in Mozambique :... 11 Tete power project seek partners :... 12 Vale 3rd quarter coal production improves :... 13 AFRICAN NEWS Bell inks deal with Japan s Kobelco :... 16 Study deliver positive results for Tanzania s Fungoni :... 17 Zambia s tailings, discards to produce lead and zinc :... 18 NEW INDUSTRY TRENDS & TECHNOLOGY Fluke introduce 830 laser shaft alignment tool :... 19 Fluke s range of process calibration tools :... 20 New Keller manometer hits the market :... 21 Finding solutions to meet the world s changing resources and energy needs :... 22 PUBLISHER MTI Moçambique Limitada Editor: Andrew Maramwidze drewmara@gmail.com Editorial Contributors: More Love Mafu Dakito Bias Mario Deus Casimo Muhimua ADVERTISING SALES advertising@mozambiqueminingjournal.com Domingos Langa Brito Mamba Sergio Saidi Gersholm Twazi ADDRESS Maputo Office: 628 Julius Nyerere Avenue Maputo, Mazambique P.O Box 3236, Maputo Tel: +258 84 119 4017 / +258 84 445 5339 Fax: +258 82 423 8542 Tete Office: Talhao 4109 Matundo, Tete Tel: +258 84 119 4017/ +258 212 230 941 Fax: +258 212 227 698 info@mozambiqueminingjournal.com www:mozambiqueminingjournal.co GRAPHIC & PRODUCTION Rekai Musari Mutisi rmusari@gmail.com

EDITORIAL COMMENT MOZAMBIQUE MINING JOURNAL - October/December 2017 Editorial Comment Andrew Maramwidze Coal drives the economy, spurs growth potential Though it has taken this long for ICVL to make concrete decision on its 2014 investment, it is GEAT NEWS for this to be unfolding. Great potential poised by the country s coal industry is good news for the ailing economy. Though endowed with several minerals resources, more positive news are emerging on the coal front. Coal is fast becoming the trump card to spur growth potential for the economy. Significant development announcement by India s International Coal Ventures Private Ltd s (ICVL) to start exploiting its coal deposits, with 35 per cent of the company s discoveries being coking coal is one such great development. This should set economic wheels in motion taxes will be collected to boost government coffers, creation of jobs and entrepreneurs will start identifying opportunities to also set other economic wheels in motion that is additional services which could include, transport, hotel and catering, entertainment among others. The Indian company is also studying possibility of producing gas out of the thermal coal and shipping it back to its native country. Producing gas will be start to local coal beneficiation industry, another plus for the economy to induce growth and possible create massive jobs. At this point, we call upon the authorities to proactively create an enabling environment to strengthen efforts and blueprint by these prospective investors, the economy needs this. Our economy needs this, an immediate trade and industry jump-start for economic growth. ICVL is a joint venture company among SAIL, CIL, RINL, NMDC and NTPC, acquired Benga, an operating coal mine in Moatize, and other untapped reserves in Mozambique from Rio Tinto for $50 million in 2014. ICVL was set up in 2009 to acquire coal assets overseas for Indian steel companies. Though it has taken this long for ICVL to make concrete decision on its 2014 investment, it is GEAT NEWS for this to be unfolding. On the other hand, the already operating Brazilian company Vale s coal production reached 3.2 million tonnes for the third quarter, up 5.8% from the previous quarter and grew 38.3% against the same period in 2016. These are good growth potential signs and we hope for more. Enjoy the read! Remember to get in-touch with us with your comments, letters and critics. 4 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 NEWS BRIEFS Balama s first production on time Australian Stock Exchange (ASX) listed Syrah Resources first concentrate production at Balama graphite has come earlier than set timelines. According to the company the production is expected end of October, though estimates had indicated that the first saleable flake product was expected in the second half of November. Syrah says the project construction was now some 98% complete, and the front-end plant commissioning and infrastructure have been completed. Syrah also announced that flotation commissioning will start shortly followed by filtration, drying and bagging. The Balama operation is expected to produce an average of 365 000 t/y of graphite concentrate during its first ten years of production, to deliver free cash flow of $160-million a year. Gold mining resume at Manica Concession Mining activities at Xtract Resources Manica concession has resume on the western half. Omnia Mining a seasoned mining contractor stated the production following signing an agreement to exploit the alluvial gold deposits at the concession, earlier this year with Xtract s subsidiary Explorator. igned mining contractor agreements with Omnia and Company for the exploitation of alluvial gold deposits at the concession. Omnia has the exclusive right to mine the unconsolidated alluvial deposits on the western half of the concession. On the another hand Sino Minerals Investment has exclusive right to mine the alluvial deposits on the eastern half of the concession. I am pleased to report that after having completed all of the process preparation, Omnia is now in commercial production. We look forward to a stable operation and rapid increase in production to 400 t/h or more, Xtract chairperson Colin Bird said. Meanwhile, Sino has also started production on the eastern half of the concession. Montepuez redesign to save millions Owners of Montepuez graphite project said the project s capital costs could be cut from $126-million to $42.3-mllion, while operating costs could reduce from $422/t to $337/t, as new engineering design commences. Battery Minerals the Montepuez developers said the engineering study will save millions and ensure a refined mine plan producing higher head grade, an owner-operator mining strategy, lower water consumption and increased recoveries will save millions. We have identified the optimum operating and financial balance for Montepuez and the outcome is extremely strong, said Battery Minerals executive chairperson David Flanagan. By restructuring the size, mine life and some other key aspects of this project, we can increase the head grade significantly, slash the capital and operating costs, and cut the payback period by more than half. The value engineering study has also reduced expected life-of mine from 30 years to ten years, with annual concentrate production reducing from 100 000 t/y to between 45 000 t/y and 50 000 t/y, and average annual earnings before interest, taxes, depreciation and amortization reducing from $27-million to less than $20-million. With this robust development strategy now clearly mapped out, we will now move to secure our mining concession, progress the detailed engineering and design work, and step up offtake and funding discussions, said Flanagan. In addition, we have a very exciting drilling programme which we will be kicking off in the coming weeks. Nacala corridor gets additional funding Mozambique and Malawi have agreed to expand the Nacala Development Corridor, under a new agreement recently signed. The fresh agreement provides for additional funding of US$2.5 billion for development of the corridor, Authorities in Mozambique said the contract allow the corridor to evolve, as well as fostering economic growth by promoting and coordinating economically viable businesses in the transportation, agriculture, trade, mining and tourism sector. Initial, the two governments signed an agreement on Nacal Development Corridor in 2000 to respond to the challenges in the transport and logistics sectors due to economic growth of the two countries. Oldemiro Balói, Mozambique Minister of Foreign Affairs and Cooperation said the central objective of the agreement is also to regulate and coordinate cross-border aspects, as the railway crosses Malawi. It is therefore necessary to take into account some practical aspects such as immigration and customs procedures. The Nacala Development Corridor, a US$4.5 billion investment funded by Brazilian mining group Vale was formally inaugurated last May. It is to link its mines in Moatize to the port of Nacala, from where coal is exported to the whole world. Thai petroleum firm ready to export Rovuma gas Thailand state-owned petroleum company - PTT Group has intends to buy 2.6 million tonnes of natural gas per year from Rovuma basin. US group Anadarko Petroleum extracting the gas in Area 1 of the Rovuma basin is facilitating the deal. Anadarko is the operator of the Area 1 block with a 26.5% stake, other partners are Mozambican state-owned Empresa Nacional de Hidrocarbonetos (15%), Mitsui E&P Mozambique Area 1 Ltd. (20%), ONGC Videsh Ltd. (16%), Bharat PetroResources Ltd. (10%), PTT Exploration & Production Plc (8.5%) and Oil India Ltd. (4.0%). PTT Exploration & Production Plc, a subsidiary of Thai group PTT, acquired the 8.5% stake held by Ireland s Cove Energy, through a purchase of the entire company s share capital for US$1.9 billion. Partners in the Area 1 block are expected to make a final investment decision by end of 2017. The natural gas extraction is slated to begin between 2022 and 2023. Vale, Mota-Engil sign a US$445 million deal Mota-Engil Africa a subsidiary of Portuguese group Mota-Engil has been awarded a contract to supply mining services worth US$445 million Vale. Under the contract, Mota-Engil Africa will provide services that include drilling, supplying explosives, loading and transport of coal, in Vale s coal mining project in Moatize. Vale headquartered in Rio de Janeiro, Brazil is one of the largest mining groups in the world and is still the largest private company in Latin America operating on five continents. Meanwhile Mota-Engil Africa was hired in Angola by the provincial government of Luanda to carry out the third phase of the project to renovate the streets of Luanda. The contract, worth US$76 million, includes the repair of potholes, pavements and curbs, the installation of road signs and cleaning bins, among other services and supplies. www.mozambiqueminingjournal.com 5

COVER STORY MOZAMBIQUE MINING JOURNAL - October/December 2017 Indian steel companies finds alternative in Mozambique India has faced huge problems in acquiring good quality coking coal, with the Australian mines jacking up prices, forcing steel companies to scout for alternative sources, including Canada and the US. India s International Coal Ventures Private Ltd is set to start the mining of coking coal from its holdings across the country. Prakash Kumar Singh, Chairman of Steel Authority of India Limited (SAIL) who also heads ICVL, a joint venture with several firms said the company has floated a tender for mining coking coal to be awarded soon. India has faced huge problems in acquiring good quality coking coal, with the Australian mines jacking up prices, forcing steel companies to scout for alternative sources, including Canada and the US. "Some 35 per cent of the deposit at our Mozambique mines is coking coal and we intend to have it mined and shipped home," Singh said. ICVL will ship the coal out of the country from Macuse, which has better rail connectivity with the Moatize region - in Tete province where the mines are located - compared to the Beira port, which ICVL had planned to use initially to export the coal. Hard coking coal from Australia sells for $180-220 a tonne and the mining and shipping costs have to be well below that level for the venture to be profitable. ICVL has floated a tender to sell thermal coal which makes up the bulk of the mine's deposits and the tender seeks buyers for 1.4 lakh tonnes of thermal coal. ICVL had bought the mine three years back, but shipping the coal back to India was found to be expensive. Besides, much of the coal was of the steam coal, or the thermal coal variety, which was considered uneconomical. Authorities from India are now studying the possibility of producing gas out of the thermal coal and shipping it back to the country. India has 25,329 MW of gas-based power plants, of which 14,305 MW are either fully or partly non-functional because of the lack of gas. These plants are estimated to have cost Rs 1.24 lakh crore. However, analysts felt unless global gas prices go up, the gassification of coal may not be very economic. ICVL, a five-way joint venture among SAIL, CIL, RINL, NMDC and NTPC, acquired Benga, an operating coal mine in Moatize, and other untapped reserves in Mozambique from Rio Tinto for $50 million in 2014. ICVL was set up in 2009 to acquire coal assets overseas for Indian steel companies. 6 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 GENERAL NEWS Continuous Improvement Drive Move To Reborn Equipment Continuous improvement efforts and taking cognisance of new legislation have brought about an unbeatable offer from equipment manufacturer Sandvik Mining and Rock Technology in driving unprecedented numbers of mines to opt for from-thebottom-up rebuilds of equipment rather than more traditional selective rebuilding and repairs. The company s Jet Park rebuild workshop is a hive of activity as a significant number of machines cross the floor to get a new lease of life. Sandvik s strategy to rebuild machines, including all-new components from the frame up, has been a revelation and at approximately 65% of the cost of a new machine represents an offer that simply cannot be ignored. The Reborn strategy means that used Sandvik equipment is stripped to the frame and rebuilt with all new components before being delivered to the customer with the same warranty as a new machine. What s more, each piece of equipment is brought up-to-date with the latest specifications, including operational, safety and comfort features found on new models. According to Sandvik operations manager, Andre van der Heever, this is part of the reason why reborn equipment makes sense as it brings the equipment in line with new health, safety and environmental legislation. Equally important, the productivity, efficiency and operational performance is also brought up to the same specification as equivalent new equipment. Customers are aware that tighter standards are being applied and as a result they are mitigating the risk of liability arising from accidents involving non-compliant equipment. They are opting rather for genuine OEM services instead of supposedly cheaper options. Apart from the benefits mentioned before, reborn services save time and are less complex as it cuts out the need to strip and evaluate each machine, obtain quotes for repairs or replacement and then reassemble it. Reborn s are simply stripped, the frame repaired if necessary and a complete kit is purchased to undertake the repairs including new cabs, motors, transmissions, harnesses and everything else that is required. With all the parts at hand the machine is simply reassembled, tested and made ready for delivery. Where traditional rebuilds take an average of six-months to complete, the reborn route allows customers to implement it as a scheduled maintenance intervention and halves the time a machine is out for repairs. This obviously has a significant impact on their production. Sandvik rebuild workshop manager, Stephan Joubert, says that because the machines are issued with a new machine warranty, all work is carried out with the utmost professionalism by highly OEM trained workmen. They work to the strictest standards and rebuild each piece of equipment to the original specifications as indicated by its serial number. This takes a high degree of expertise and commitment to do things right and is something that our Sandvik team has in spadesful. This type of service is in line with our Customer for Life approach whereby we assist them to get the most out of their equipment through appropriate support and services designed to uplift their operations. For this reason, the team also undertake careful root cause analyses of failed components to provide customers with findings that may help them to implement improvements to prevent damage in future, says Joubert. Sandvik rebuild specialist, Cedric Chiloane, says that reborn services are available for any Sandvik underground hard rock equipment. It is advisable to speak to a Sandvik advisor to ensure the reborn program can be undertaken as a planned intervention. The fact that the reborn is a planned intervention with adequate lead times means that all parts can be manufactured and sourced globally and delivered in kit form to Jet Park in the most cost effective manner, hence the unbeatable price positioning. This is considerably cheaper than buying individual parts for a selective rebuild. It is also quicker than conventional rebuilding. In some instances the turnaround time on a reborn machine may even be quicker than buying and waiting for delivery of a new machine. We think that it addresses every need usually associated with buying a new machine in terms of quality, safety, reliability and increased availability. Considering it is significantly cheaper and has a far shorter lead time than a new machine, it is definitely a good offer. In comparison with conventional rebuilds where the machine is only as good as its weakest part, reborns have no such limitation as they make use of all new parts all around, Chiloane concludes. www.mozambiqueminingjournal.com 7

GENERAL NEWS MOZAMBIQUE MINING JOURNAL - October/December 2017 Bell and Lonagro team up in Mozambique, Malawi Bell Equipment, has appointed Lonagro Mozambique as its exclusive dealer in Mozambique and Malawi. The development comes, as part of the group s strategy to grow its independent dealer network in select markets. "Working through independent dealers has proven to be a model that allows us to provide better coverage and support to our customers in markets where areas are vast, and machine populations are low. In the equipment industry, infrastructure and investment are required to provide support that is essential to users of this equipment, said Stephen Jones, Bell Equipment's Group Marketing Director explaining the rationale behind the company's strategy and Longaro's appointment. Jones said synergies develop quickly with dealers that have complementary products that can help support the necessary infrastructure and better weather market cycles. Lonagro is a division of Lonrho Group, which holds John Deere Agriculture dealerships in a number of African countries. The company has made a name for itself in the highly contested agriculture equipment market by displaying a willingness to invest and take a long-term view of the countries in which it operates as well as its equipment users and future opportunities. Bell believes a closer relationship with Lonagro would provide benefits for Bell, Lonagro and the most beneficiary being customers. "We assessed a number of different business models as well as other potential dealers as part of a business improvement project launched early in the year," Jones said. He said synergies are clear with regards to management structures, scarce skills, logistics, facilities, and understanding customers. This gives Bell confidence that Lonagro, as a top performing John Deere dealer with a dynamic and motivated team, is well positioned to support our existing customers and grow the footprint of our machines in the region." Lonagro is optimistic that it will be able to supply and support the extensive range of Bell products into the territory. "While the market remains difficult we are confident in the future of the countries. Long term agriculture, mineral resource and infrastructure opportunities are vast, and with our Bell alliance we can now supply a significant range of products that will be used in these industries. This will allow Lonagro to continue to invest and position itself as the clear equipment provider of choice, comments Reinhardt van Zyl, Managing Director of Lonagro. 8 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 GENERAL NEWS Incentives to Mozal bleed government coffers Mozal continues to benefit from large tax incentives in corporate income tax (IRPC), value added tax (VAT) and royalties. Analysts have however called for review of the economic benefits of the megaproject, as government face the biggest financial and economic crises. The International Monetary Fund (IMF) has also called for elimination of the incentives. Operating since 1998 in Maputo province, the aluminium smelter was the first major project to attract direct foreign investment (FDI) in the independent Mozambique. President Joaquim Chissano s regime extended immense facilities and tax incentives to the project, which saw commencement of a free zone, only for the company to operate together with their suppliers. Tax benefits began at the rate of taxation, which was determined in one percent of gross revenues from quarterly sales volume, in accordance with Decree 45/97, total exemption from IRPC, exemption from Industrial Contribution, exemption from Urban Property Tax as well as of any other state import on their real estate. However, records from the General State Accounts of the last few years, indicate that the megaproject has obtained the greatest profits than any other company in the country, and has also not paid the VAT and royalties. Economic experts feel that the tax exemptions need to be eliminated in order to support further urgent consolidation of public finances. Quizzed by @Verdade, Mozal stated that it had paid the annual taxes required by applicable law, specifically decree 45/97 of December 23. In addition Mozal's foreign suppliers, which represent more than 70% of its services, were also exempt. This comes at the backdrop of the company importing even local available services and goods, as decisions made in Maputo. Several academic studies have found that over the last 20 years few Mozambican companies have been able to become suppliers of this smelter which basically imports its raw material and exports aluminium. In 2015, to minimize its losses, Mozal's majority shareholder, BHP Billiton, passed its participation to a new multinational created in 2014, denominated South32. The governmental position of maintaining the fiscal benefits of megaprojects goes against the IMF's position, whose recommendations are usually appreciated positively by the successive government of the Frelimo party. "The position of the Fund on tax exemptions in general (including VAT) is that they need to be eliminated in order to support further urgent consolidation of public finances," IMF told @Verdade. www.mozambiqueminingjournal.com 9

GENERAL NEWS MOZAMBIQUE MINING JOURNAL - October/December 2017 Moma achieves record ilmenite production Moma titanium minerals mine s production volumes decreased across board in the third quarter, with the exception of ilmenite. The mine developer Kenamare Resources said heavy minerals concentrate (HMC) production decreased by 16% year-on-year to 272 600 t for the third quarter, while ilmenite output increased by 6% year-on-year to 257 500 t. Kenmare said zircon production decreased by 8% year-on-year to 18 100 t, comprising 12 100 t of primary zircon output and 6 100 t of secondary zircon output while rutile production was down 12% year-on-year to 2 200 t. Michael Carvill, Kenmare Managing Director said the HMC production decreased owing to guided lower grades and more challenging mining conditions, which the company expected would improve in the fourth quarter. He attributed the decrease in zircon output to the increase of intermediate zircon stocks, as ongoing circuit modifications progressed. Carvill highlighted that in the three months to September 30, Moma achieved record ilmenite production, which had kept the company on track to record its highest ever yearly production of the metal, which would be within Kenmare s guidance range of between 950 000 t and 1.05-million tons. In the product market, Chinese demand for ilmenite is improving again, following a slower period in the last couple of months. The zircon market has performed strongly, with further price increases achieved during the second half of the year, he added. Total shipments of finished products during the third quarter decreased by 26% to 208 400 t, which was in line with previous guidance, primarily owing to planned maintenance of the company s primary trans-shipment vessel. Shipments were also impacted on by extended periods of adverse weather during the quarter. Both trans-shipment vessels returned to full service in September, with high loading rates achieved. Kenmare expects shipments during quarter four to be the highest of the year and sales during the quarter comprised 197 000 t of ilmenite, 9 300 t of zircon and 2 100 t of rutile. Closing stock of finished products at September 30, was 271 400 t compared with 202 500 t at June 30, of which 19 200 t were being held for a customer that had paid. 10 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 GENERAL NEWS Rio Tinto reported for fraud in Mozambique US Securities and Exchange Commission (SEC) has filed a civil complaint in the US against Rio Tinto s disclosures and timing of the impairment of Rio Tinto Coal Mozambique (RTCM). SEC says the company committed fraud by not accurately disclosing the value of RTCM and not impairing it when Rio Tinto published its 2011 year-end accounts in February 2012 or its interim results in August 2012. However, Rio Tinto has allayed the allegations citing that the impairment was reflected in Rio Tinto s 2012 year-end accounts. Rio Tinto intends to vigorously defend itself against these allegations, said the company in a statement. The SEC has alleged in a civil complaint filed in the United States District Court for the Southern District of New York that Rio Tinto committed fraud by not accurately disclosing the value of RTCM and not impairing it when Rio Tinto published its 2011 year-end accounts in February 2012 or its interim results in August 2012. Rio Tinto believes that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC s claims will be rejected. Separately, Rio Tinto has reached a settlement with the United Kingdom s Financial Conduct Authority (FCA) in relation to the timing of the impairment of RTCM. The FCA determined that Rio Tinto should have carried out an impairment review in relation to RTCM for its 2012 interim results and, if it had done so, those results published in August 2012 would have reflected the impairment it recorded six months later. The FCA determined that Rio Tinto breached the FCA's disclosure and transparency rules and imposed a financial penalty on Rio Tinto of 27,385,400 ($36.4 million). The size of the fine is calculated by reference to the company s market capitalisation. www.mozambiqueminingjournal.com 11

GENERAL NEWS MOZAMBIQUE MINING JOURNAL - October/December 2017 Tete power project seek partners Ncondezi Energy has entered into negotiations with partners to construct and operate its 300 MW coal-fired power project. The company is discussing with China Machinery Engineering and General Electric South Africa to develop, construct and operate the integrated Ncondezi coal fired power project and open pit coal mine in Tete. With significant experience in Africa, China Machinery Engineering and General Electric South Africa are set to clinch the deal. And Ncondezi is expected to agree to non-binding agreement giving the two companies a chance to acquire a minimum 60% equity stake in the integrated project Meanwhile the non-binding agreement grants exclusivity until 30 April 2018 to conclude a binding joint development agreement (JDA) The JDA will set out the commercial terms on which the parties will complete the acquisition and jointly develop and fund the integrated project up to and including financial close. Indications are that China Machinery Engineering and General Electric South Africa are to lead project debt financing in conjunction with Ncondezi for both the power project and mine project at FC China Machinery Engineering and General Electric South Africa will be responsible for the engineering, procurement and construction (EPC) and operations and maintenance (O&M) for the integrated project on a build own operate basis. Ncondezi Energy is pleased to announce agreeing to enter into exclusive negotiations with CMEC and GE, following an intensive process to identify a new partner to take a leadership role in delivering the 300 MW coal fired power project and integrated mine," said Ncondezi Energy non-executive chairman, Michael Haworth. The non-binding agreement proposes to develop the power plant and mine projects as an integrated project, which has the potential to greatly simplify the development, commercial and financing aspects. 12 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 GENERAL NEWS Vale 3rd quarter coal production improves Vale s coal production reached 3.2 million tonnes for the third quarter, the company announced to its stakeholders recently. The Brazilian mining company said the production was up 5.8% from the previous quarter and grew 38.3% against the same period in 2016. The development comes after Vale fixed a vessel to carry a 70,000 metric ton of metallurgical coal cargo from Nacala in Mozambique to Port Kembla in Australia. The shipment was the first direct shipment of Nacala coal to Australia, the largest seaborne exporter of met coal in the world. Australia s imports bulk premium HCCs prized for its high CSR. Vale has invested $2 billion in its Moatize coal mine in northwest Tete province, and plans to plough another $6.4 billion into a region wrecked by the 1977-1992 civil war. Early this year, Vale reported that the Moatize mines had produced 1.6 million mt of met coal and 802,000 of thermal coal in the first quarter of 2017. The report indicates that production of met coal was up 62.2% from the fourth quarter of 2016 and 170.6% higher than a year earlier, and of thermal coal up 38.8% from the previous quarter and up 170% year on year. In November 2015, Vale sent its first shipment of met coal from Nacala to the west coast of India. www.mozambiqueminingjournal.com 13

MOZAMBIQUE MINING JOURNAL - October/December 2017 POLLUTION LEGAL LIABILITY CONTRACTORS POLUTION LIABILITY (CPL) STORAGE TANK LIABILITY (STL) OPERATORS EXTRA EXPENSE (OEE) OIL LEASE PROPERTY (OLP) RIGGERS LEGAL LIABILITY RIG AND EQUIPMENT PHYSICAL DAMAGE PROFFESSIONAL LIABILITY WORKMANS COMPENSATION ENGINEERING/ CONSTRUCTION MARINE LIABILITY ASSETS ALL RISK AVIATION TERRORISM/ KIDNAP AND RANSOM BANKERS BLANKET BOND NON LIFE MARKET SHARE II QUARTER Extract from 2017 Quarter II Report 2016 2017 EMOSE SIM GA MCS HOLLARD AUSTRAL BRITAM INDICO TM DIAMOND FIDELIDADE PHOENIX ICE IMPERIAL 21,8% 23,8% 12,2% 22,21% 16,2% 10,3% 4,9% 5,3% 9,4% No Statistics 4,1% 3,2% 5,0% 2,5% 4,8% 4,4% 0,9% 1,3% 2,7% 2,2% 1,1% 1,6% 1,6% 1,0% 4,9% 31,4% 0,3% 0,7% ICE has grown its market share from 0,8% to 18% for the year to date making it the 2nd biggest insurer. ICE s market share for Quarter II (31%) makes it the number one insurer for the Quarter. 14 www.mozambiqueminingjournal.com

ICE SEGUROS PROVIDES PROPERTY AND CASUALTY INSURANCE TO LARGE NATIONAL AND MULTINATIONAL CORPORATIONS IN MOzAMBIQUE. International Commercial and Engineering (ICE) Seguros is owned and managed by ICE Insurance Holdings No: 004237V Isle of Man, British Isles. ICE Insurance has a long history investing in the insurance sector in Mozambique being the original founders of Global Alliance Seguros which was licensed in Mozambique in 1992 which they sold to Barclays in 2012. ICE has managed and owned successful insurance operations in Angola, Ghana, Mozambique, Namibia, South Africa, Mauritius and the United Kingdom. ICE Mozambique was awarded a non life insurance license in April 2015. ICE Mozambique is focused on large complex risks and specifically the oil and gas industry. ICE has licensed insurance operations in Johannesburg (FSB Reg. 1996/002267/07) and London (FCA Reg. 314197) which enables the company to access the largest and most complex risk capacity in the London market and worldwide. WE DO ORDINARY THINGS EXTRAORDINARILY WELL. INTERNATIONAL COMMERCIAL & ENGINEERING ICE SEGUROS, SA NUEL: 100 572 532 NUIT: 400 580 952 WWW.ICE.CO.MZ

AFRICAN NEWS MOZAMBIQUE MINING JOURNAL - October/December 2017 Bell inks deal with Japan s Kobelco Bell Equipment has signed an agreement with global excavator specialist - Kobelco Construction Machinery Co. Ltd (Kobelco), for exclusive distribution and support of the company s excavators in the Southern African region. Stephen Jones, Bell Equipment Group Marketing Director said the partnership should provide both companies with the stability needed to realise their growth potential in the excavator market. "The Kobelco focus on product innovation and efficiency resonates with our own ideologies and the company also shares our passion for customer support, making it a great fit for our business. We share a number of dealers around the world and we are fully aware of how impressive these machines are and the name they have made, specifically through the choice of premium components, overall reliability and low fuel consumption delivered by the Toyota Group's Hino engines," said Jones. Kobelco is a leader in excavator innovation, having developed Japan's first construction machine in 1930, followed in 1963 with Japan's first wheel mounted hydraulic excavator. "We are fortunate to have teamed up with a leading capital equipment distributor in Southern Africa, and also a like-minded company that believes in listening to its customers and reacting quickly," said Managing Director of Kobelco Construction Machinery Middle East and Africa, John Boyd. "With Bell Equipment's broad product range, extensive distribution network and strong reputation for strong customer support, we believe that we have found the right partner for our products in this region." Boyd said Kobelco is pursuing the enhancement of performance capacity and improved cost efficiency with due care for the environment. Kobelco excavators have two digging modes - H mode for heavy duty and higher performance and S mode for normal operations with lower fuel consumption. Real life situations show that the S mode can deliver around 20% reduction in fuel when performing the same tasks as like-sized machines while engagement of the H mode delivers 8% more productivity at the same fuel burn as competitor machines, said Boyd. He said the 'true blue Kobelco evolution' is about creating value, building a future and changing the world with the distinctive colour acting as a reminder of these underlying values that we put into our products and business dealings." Bell will be complementing its extensive product range by developing the full range of Kobelco excavators, from the small 1t mini excavators through to the largest 85t units. This will offer customers options for the smallest applications as well as competitively priced and perfectly matched loading tools for Bell Articulated Dump Trucks in the construction, quarrying and mining industries. Both companies agree that the new partnership has the potential to shake up the excavator market in the Southern Africa region. "We have no doubt that the market will react quickly to the association between a fantastic product and a strong, well-established dealer network. We look forward to introducing these excavators to our customers and have confidence that with these machines, and our proven sales and support network, that we can earn our rightful place in this market segment," said Jones. 16 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 AFRICAN NEWS Study deliver positive results for Tanzania s Fungoni Strandline Resources definitive feasibility study on Fungoni Heavy Mineral Sands in Tanzania has delivered positive results. According to the company the DFS confirms the project will deliver strong financial returns. The results indicate that the project is a high unit value product suite, is capital-efficient, and demonstrates the strategic potential of the company s portfolio of mineral sands assets. Completed by contractor firms - GR Engineering Services, IHC Robbins, AMC Consultants, Knight Piesold, TZ Minerals International, Allied Mineral Laboratories, Environmental Resource Consultants and Kiv Five Consultants the defines a realistic and proven project delivery plan and rapid pathway to commercial production; confirming the ability to complete construction and commissioning in a nominal 12 month period. Strandline says the DFS represents a significant milestone in its strategy to become a low-cost, high-margin mineral sands producer of relevance to key customers around the world. This DFS confirms that Fungoni is an outstanding project which will generate strong financial returns for shareholders and deliver significant socio economic benefits for the people of Tanzania, Strandline s Managing Director Luke Graham said. He said the project has an exceptional high unit-value heavy mineral assemblage, simple to mine, recovers +93% of the valuable mineral in the ground and produces a highly marketable product suite. The path to profitable production is short, based on proven low-cost execution strategies, the payback period and rates of return are very attractive, and there is potential to grow mine life and re-use the infrastructure on future Strandline projects. The Fungoni Project is the first in the company s pipeline of quality mineral sands assets in Tanzania, paving the way for its multiple future development options, said Graham. The company has undertaken engineering trade-off evaluations during the DFS to optimise the processing route, product marketability, minimise execution risk whilst ensuring a practical and responsible project solution is achieved at the lowest cost base. Advanced beneficiation and separation of minerals will take place in Tanzania with high local content maximising value generation and capital inflows to Tanzania. The DFS confirms a very favourable product suite and high mineral recoveries. The project is favourably located about 25km from Dar es Salaam port in a growing commercial/industrial district and will benefit from the close proximity to existing infrastructure, including an established road network and services industry. PIRTEK FRANCHISE OPPORTUNITY International Franchise Expanding to Mozambique Hydraulic & Industrial Hose Service For further information please contact: Ray Wentzel Tel: +27 11 608 2299 Cell: +27 83 417 6124 Email: rwentzel@pirtek.co.za www.pirtek.co.za www.mozambiqueminingjournal.com 17

AFRICAN NEWS MOZAMBIQUE MINING JOURNAL - October/December 2017 Zambia s tailings, discards to produce lead and zinc Surface mine tailings and discards at the Kabwe project will soon be utilised to recover lead, zinc and vanadium. Jubillee Platinum and BMR Group have established a joint venture Kabwe Operations to recover the minerals from an estimated 3.2 million JORC compliant tonnes of surface assets. national economic importance. On closure of the operations, much of the site area and plant infrastructure was sold in discrete lots to private investors, with the overall responsibility for decommissioning and rehabilitation of the sites retained by ZCCM. The JV will finance and execute the approved works program with commercial production of lead and zinc expected in 2018. I am delighted to announce that we have successfully secured access to this exciting surface project that extends our reach beyond the South African bushveld complex and into other commodities. This transaction is in line with our mission to take our brand and expertise across country borders and commodities. This project is meaningful in scope, diversity and potential contribution to the company's earnings, said Leon Coetzer, Jubilee s Chief Executive Officer. Coetzer said the project will benefits from existing infrastructure including power, water and building infrastructure, which significantly reduces the required project capital and shortens the implementation time line. In entering into this agreement, we are acutely aware of the significant further opportunities presented within Zambia and will be actively exploring these opportunities, Coetzer said. The Kabwe mine was discovered in 1902 and commenced operations in 1904, reaching full-scale production in 1906. It officially closed on June 3, 1994 due to its operations becoming uneconomic at that time. New Winds is an electrical and mechanical engineering company with 45 years experience in the mining, railways and industrial sectors of South Africa, Mozambique and other parts in Africa. We specialise in repairs, rewinds and sales of the following : * AC / DC Electrical motors (HV / LV) * Traction Motors (Locomotive motors) * Transformers (Agents for TESAR) * Generators (Standby Silent Diesel Type) * Alternators * Mini-Subs * Vibrators * Oil purifying (field services) * Etc. for further information go to: www.newwindsgroup.co.za General Enquiries Email : newwinds@mweb.co.za Tel: +27 (0) 16 365-5231 The site was placed under care and maintenance by the national mining company, The Zambian Consolidated Copper Mines (ZCCM). For 88 years of continuous operation until final closure in 1994, Kabwe was regarded as one of the famous mines in Africa and held a key position of 18 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 NEW INDUSTRY TRENDS & TECHNOLOGY Fluke introduce 830 laser shaft alignment tool The industrial test and measurement products company Fluke has on offer an 830 Laser Shaft Alignment tool for precision-align rotating shafts. According to the Fluke, the rotating machinery is susceptible to misalignment, and usually rulers and dial indicators are used to ensure rotating machinery is properly aligned. However, the Fluke 830 uses a patented single laser precision alignment system that provides accurate and repeatable measurement results ensuring that misalignment problems are properly addressed. This could be costing the facility thousands per year in replacement bearing costs, hours of unnecessary repair time, and crippling unplanned downtime, and a probable decrease in the machine's useful life. The Fluke 830 Laser Shaft Alignment tool offers simple functionality, fast, accurate and actionable answers is sold local by the Comtest Group.. Unlike the straight-edge method or dial indicators, Fluke s 830 performs complicated alignment calculations automatically, which means users have the answers needed to quickly align the machine. An enhanced user interface provides easy format results that don't require extensive alignment knowledge. The "All-in-One" result screen shows both coupling results and feet corrections (vertical and horizontal) in real terms, allowing for corrective alignment action. The Fluke 830 features: Single laser measurement technology - reduced errors from backlash resulting in better data accuracy Intuitive guided user interface for easy alignment Compass measurement mode for flexible, reliable and repeatable measurements using an activated electronic inclinometer Dynamic machine tolerance check for continuous evaluation of alignment adjustments Unique extend mode handles gross misalignment by virtually increasing laser detector size Data protection with auto save and resume capability www.mozambiqueminingjournal.com 19

NEW INDUSTRY TRENDS & TECHNOLOGY MOZAMBIQUE MINING JOURNAL - October/December 2017 Fluke s range of process calibration tools Industrial testing equipment manufacturer Fluke local represented by Comtest has on offer a range of process calibration tools for process environments such as pharmaceutical, refining or other industrial areas at a bench, out in the plant, or in the field. Fluke P3100 hydraulic deadweight tester is high quality, high performance, easy to use oil pressure calibration. Fluke 726 multifunction process calibrator is designed specifically for the process industry with broad workload coverage, calibration power and unsurpassed accuracy Some of Fluke s testing tools include: Electrical and multifunction calibration Fluke s broad range of field and bench calibrators source, simulate, and measure pressure, temperature, and electrical signals to help verify and adjust test equipment or almost any process instrument. ma loop calibration Loop calibrators are essential tools for working with 4-20 ma current loops. Fluke loop calibrators provide ma sourcing, simulation and measurement, readouts in both ma and % of span, 24 V loop supply, simple operation and reliable accuracy. Pressure calibration Instrumentation is found in virtually every process plant. Periodic calibration of these instruments is required to keep plants operating efficiently and safely. Fluke provides a wide selection of field and bench calibration tools to quickly and reliably calibrate pressure instrumentation. Temperature calibration Temperature calibration refers to the calibration of any device used in a system that measures temperature from sensors to transmitters to displays. Fluke offers bench and field solutions to ensure process temperature accuracy of not only the system s electronic temperature signals, but also the very temperature sensors that initiate those signals. Fluke 7526B precision process calibrator is the best balance of economy and accuracy for calibration of temperature and pressure process measurement instrumentation. Fluke 754 HART multifunction documenting process calibrator, this field and bench calibrator sources, simulates, and measures pressure, temperature, and electrical signals with exceptional precision. Fluke 718-300G pressure calibrator with pump provides a total pressure calibration solution for transmitters, gauges and switches with pressure source and milliamp measurement to calibrate and maintain almost any pressure device. Fluke 9144 field temperature metrology well - Lightweight and portable field dry-well small enough to easily carry in one hand. (50 C to 660 C and accurate to ± 0.1 C) GreenDoor L O G I S T I C S Specialized transporters of containerized, general and project cargo between RSA, Mozambique, Zimbabwe, Zambia and DRC GREENDOOR LOGISTICS Cnr Premier & Main Road, Olifantsfontein Johannesburg Tel: + 27 11 316 5003 Email: sandra@greendoorlogistics.co.za Web: www.greendoorlogistics.co.za A member of 20 www.mozambiqueminingjournal.com

MOZAMBIQUE MINING JOURNAL - October /December 2017 NEW INDUSTRY TRENDS & TECHNOLOGY New Keller manometer hits the market Geotechnical solutions specialist Keller Group has launched its latest digital manometer for analysing pressure peaks and recording measurement data LEO 5. According to the company, the manometer features precise sensor technology, fast, high-resolution signal processing, peak recording and data storage with a time stamp. Designed for deployment in hostile environments, the LEO 5 features a robust stainless steel housing, safety glass front, a 16mm backlit display and capacitive touch controls. Undetected pressure spikes are one of the common causes of premature wear and untimely failures in pneumatic and hydraulic systems. And in freshwater systems, this phenomena is sometimes called water hammer. However, the LEO 5, with its pres sure peak analysis mode, sample and record system pres sure at a rate of 5 khz and with 16 bit resolution, enabling the troubleshooter to positively characterize system behavior. With storage capacity for over 50 000 peak values, including tempe rature and time stamp, data from the LEO 5 is exportable for detailed analysis via the included USB interface. In the standard measurement mode, the LEO 5 operates at a sampling rate of 2 khz and with an A-to-D resolution of 20 bits. The LEO 5 line-up includes seven standard full-scale pressure ranges between 3 and 1000 bar. In the temperature range of 0 50 C, the TEB (Total Error Band) for pressure is ± 0.5 %FS. When temperature conditions are stable, the LEO 5 is capable of achieving a TEB accuracy of ± 0.01 %FS. The LEO 5 is available with a wide range of optional features, including a standard radio interface for measurements in inaccessible or mobile locations. Traditional analog outputs of 4 20 ma and 0 10 VDC and up to two switch outputs for process control and monitoring can also be provided. Configuration and data transmission take place via USB or RS485 interface. Special housing materials, pressure connections and other user-specific options are available. With high resolution for accurate measurement, pressure peak analysis and measurement data recording, the LEO 5 is quickly adopted as an indispensable tool by the pneumatic or hydraulic system mechanic. Local Keller s LEO 5 digital manometer are available through South African company Instrotech. www.mozambiqueminingjournal.com 21

MOZAMBIQUE MINING JOURNAL - October/December 2017 Finding solutions to meet the world s changing resources and energy needs Social writer Eric Hoffer wrote In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists, a quote that resonates with Denver Dreyer, CEO of WorleyParsons RSA. As a company that helps customers meet the world s changing resources and energy needs, WorleyParsons understands the need for agility and developing new solutions to ever-changing challenges. The company delivers projects and provides expertise in engineering, procurement and construction management across the full asset lifecycle in the hydrocarbons, infrastructure, minerals, metals and chemicals sectors. Operating in a global environment that is leaner and fitter than it has ever been, with customers seeking ways to deliver more with less, Dreyer says that WorleyParsons RSA is focusing on finding cost-effective and innovative solutions to address the current challenges facing the mining sector. A key focus is on assisting emerging miners to access funding for their mining projects by helping to develop their studies to a point where obtaining funding is easier. Developed by Advisian, a WorleyParsons global business providing management and strategic advisory services, StepWise is a low-cost financial and technical process model that enables emerging miners, as well as Tier 1 companies, to evaluate a resource and identify risks upfront. In a world of constrained capital, companies seek maximum return on investment, and the unique StepWise process very quickly and costeffectively identifies whether or not an ore body or any other type of resource project will be viable or feasible, says Dreyer. He explains that the methodology enables a significant number of options to be tested in a short period of time to determine the optimal outcome to pursue given the constraints. The StepWise process provides solid data to enable prospective funders to make strategic investment decisions, with a focus on maximising returns, while minimising and managing exposure to risk. While technology in the mining sector has remained relatively static over the last few decades, WorleyParsons has been cultivating a culture of innovation. Locally the company has been integrating latest developments in design and computing to create innovative tools that improve efficiencies and reduce risk in mining projects. WorleyParsons RSA began developing its integrated design project platform over six years ago, by integrating 3D intelligent design data mapping with over 20 different engineering design processes and programmes to create a visual 5D design scope that incorporates schedule and cost. The 5D integrated project design platform presents miners with the ability to look pre-emptively forward and create a scenario plan for their project, and engage in the right discussions with prospective shareholders. A recent development at WorleyParsons RSA which aims to provide highly skilled resources to the table in a cost-effective way is the Extended Consultant Programme (ECP). With access to subject matter experts on a contract basis, WorleyParsons is able to broaden its skill base across the African location and tap into years of specialised expertise and experience cost-effectively when required. Locally, transformation in the industry is a priority for service providers such as WorleyParsons. Traditional markets are changing and service providers have to be proactive or else be at risk of becoming obsolete. As part of our unwavering commitment to transformation, we are leading this agenda in engineering across all sectors in South Africa, says Dreyer. We have identified and partnered with sustainable, empowered businesses that are capable of growing with us. As part of our Enterprise Supplier Development (ESD) programme we are collaborating with SMEs to jointly deliver services in the mining, water, energy and infrastructure sectors. The partnerships that we are creating are mutually beneficial. We will evaluate the strengths that each party brings to the table and identify where we can help each other. These enterprises will benefit from skills transfer and gain an understanding of how to successfully deliver bigger projects with our support, while we do our part to transform the engineering sector in South Africa, says Dreyer. The company also recently hosted the Supplier Grow Conference (in collaboration with South32) aimed at tackling the issues of access to the market for SMEs, and identifying opportunities and innovation in the mining and construction sector with transformation in mind. The conference provided a forum for discussing the challenges that mining companies and SMEs are facing today. Through our activities such as this conference, we are committed to co-creating a future for all players in the sector and finding solutions to overcome the challenges jointly as an industry, concludes Dreyer. Issued by: Serendipity Events, Promotions & Exhibitions On behalf of: WORLEYPARSONS Editorial contact: Loll Thomson (011) 467 2133 Mail to: loll@sepe.co.za 22 www.mozambiqueminingjournal.com

Always serving SADC Flat Decks Low beds Tankers Side Tippers Transportes Lalgy, Lda. Where the road ends, we carry on... Av. Da Uniao Africana, 441 (ex-estrada Velha Da Matola) Matola Maputo, Mozambique Tel: (258) 21 720 482, Fax.: (258) 21 720 452 Cel: (258) 82 303 5713 / 84 303 5317 E-mail: lalgy@lalgy.co.mz, Web: www.lalgy.co.mz Maputo/ Beira/ Tete/ Nacala/ Pemba