RIO TINTO divests from Mozambican coal

Rio Tinto announced the sale of their coal mines in Tete Province, Mozambique, by 50 MUSD to Indian Coal Ventures Pty Limited (ICVL). The agreement includes the Benga coal mine and other active projects in the Tete Province and does not include other Rio Tinto assets in the country.

Rio Tinto started their activities in Mozambique in 2011, acquiring Riversdale Mining assets for 3.7 bn USD. In this year’s first half (characterised by a strong fall in coal prices) the mines produced 733 thousand tons of coking and thermal coal. The coal project in Mozambique suffered heavy losses in 2012 – 2 bn € – and subsequent layoffs in 2013.

Rio Tinto is not completely divesting from Mozambique, as it will keep the Matumba mineral sands assets and a crane depot in the country.

ICVL is a joint-venture created by the Indian government with the task of acquiring coal assets abroad. ICVL includes some of the largest state-owned Indian companies: Steel Authority of India Limited, Coal India Limited, Rashtriya Ispat Nigam Limited, National Minerals Development Corporation Limited and National Thermal Power Corporation Limited. This transaction has given the ICVL the control of substantial coking and thermal coal resources, including a 65 per cent stake in the Benga mine and other assets (including exploration licences).

The transaction, due to be completed during this year’s third quarter, is pending regulatory authorisation.

You can read more at this story’s sources:

Portugal Global website

The Sidney Morning Herald

Angolan diamond June sales up 20% – Vendas de diamantes angolanos aumentam 20% em Junho

The sale of Angolan diamonds in June increased 20% (when compared to May), reaching 117 MUSD (780 thousand ct, 156 thousand more than in May). According to the Angolan Government (MGM – Geology and Mines Ministry), the positive variation is due to a 32% increase in the production of the Catoca kimberlite mine (partly owned by Alrosa). The Catoca mine currently produces the bulk of the Angolan diamonds. Given the lower than average value of Catoca diamonds (compared to the average Angolan production), the average sales price declined from 156 in May to 150 USD/ct in June due to the larger Catoca share (in June compared to May).
The Angolan Government aims to increase the diamond production by 5% annually until 2015 (from 8.3 Mct, 1,100 MUSD in 2013).
(based on Macauhub, quoted by  http://www.angonoticias.com.
Venda de diamantes de Angola aumenta 20 por cento em Junho
28-07-2014 | Fonte: Macauhub, citado em http://www.angonoticias.com.
A venda de diamantes em Angola durante o mês de Junho atingiu 117 milhões de dólares um aumento de 20 por cento em relação a Maio, segundo dados do Ministério da Geologia e Minas.
O ministério revelou que Angola vendeu “mais de 780 mil quilates” o que representa um aumento de 156 mil quilates em relação às vendas de Maio.
Ainda de acordo com o ministério angolano o aumento das vendas é consequência do aumento em 32 por cento da produção de diamantes da mina de Catoca, considerada uma das maiores do mundo.
O aumento da produção levou a uma quebra nos preços de venda que passou de 156 dólares por quilate em Maio para 150 dólares em Junho.
A produção angolana de diamantes está avaliada em cerca de 8,3 milhões de quilates por ano, correspondendo a uma receita bruta na ordem de 1,1 mil milhões de dólares.
O Governo de Angola pretende aumentar a produção de diamantes em 5 por cento ao ano até 2015.

Not just diamonds – Jequitinhonha river gold

Gold dust from diamond-bearing gravels in the Jequitinhonha river (MG - Brazil)

Gold dust from diamond-bearing gravels in the Jequitinhonha river (MG – Brazil)

The old Tejuco settlement in Minas Gerais of the then Portuguese colony of Brazil was the birthplace of the modern diamond industry in the first quarter of the XVIII century. Until then diamonds originated in India and other minor localities in the East. After that, predominance in the diamond production changed into the South Atlantic (Brazil, Venezuela and elsewhere in South America, South Africa, Namibia, Angola, RDC, Botswana, Zimbabwe and elsewhere in west, southern and central Africa); the Indian Ocean no longer ruled diamond mining.

Diamonds are still produced in old Tejuco (now, appropriately) Diamantina region (I love the area and the country; you will see plenty of it in my posts). The Jequitinhonha river drains the region, its tributaries collecting diamonds released from the Sopa Brumadinho Formation (Espinhaço Supergroup) precambrian conglomerates in the Southern Espinhaço Range (article from a Mario Chaves and Italo Filho, here). The diamonds collected by the Jequitinhonha river are deposited along its margins (in terraces and alluvial plains) and in the bottom of the river.

The river has seen intense diamond mining activity since the XVIII century until our days (with Brazil Minerals’ Duas Barras project – to know more about this project, their webpage is here and you can get a copy of their 2007 NI43101 here). Perhaps the most active was the Tejucana project, (that saw its heyday during the period in which Sibeka from Belgium was the company’s main shareholder, until the early 90’s). Tejucana dredged diamonds and gold from the river bottom; in certain stretches gold production represented a major contribution to the total revenue.

The picture was taken a few years ago during one of my trips to the region. Usually I focus my camera on diamonds from the area (photo galleries).

But not just diamonds – the Jequitinhonha river also contains gold.

Diamond and mining legislation – Angola

Laws and regulations are as important as the mineral deposits characteristics for the success of a mineral venture.

Some jurisdictions have new or just difficult to obtain regulations, at least for the outside investor; that is the case of diamond and mining laws in Angola. To make the investors’ life easier (in these difficult times), I have set up a special section of the xmbl.wordpress.com dedicated to mining or investment related legislation under the website’s Diamonds section.

In its first steps, I have added the current Angolan Mining Code and the Artisanal Diamond Exploitation Regulation to the Angolan subsection of Legislation. As the work evolves, other legislative documents from Angola and elsewhere (Belgium, European Union, Congo – Brazzaville, Mozambique, Portugal, etc) will be added. Notice of those additions will be given in future posts.

This is a resource managed by me and my company – Sínese. If you have mining related laws you thing may add to our collection and are useful to the mining investing community we’ll be happy to to share them here; just send me an email or leave a comment at the blog.

Zimbabwean diamonds in Brazil

Zimbabwean diamonds

Zimbabwean diamonds

Zimbabwean diamonds were in the news recently, with reports of their alluvial deposits – the base of their boom production in the last years – being close to exhaustion. These ones were photographed in Diamantina, Minas Gerais (Brazil), far from home.

They are not the prettiest thing, certainly not like the famed Angolan alluvial diamonds or for that matter the local Jequitinhonha river diamonds. There surely is an interesting story behind their voyage, though.

How have they got there? Where may have they gone since?

Conflict minerals – Kimberley Process, Dodd-Frank and OECD Guidelines

Diamonds – old news

This is a controversial issue, first introduced into mainstream media and politics in the early years of this millenium and popularized with 2006 Hollywood’s “Blood diamond” movie. As a result of public outcry, the Kimberley Process was created to control international trade in rough diamonds (a PR exercise of damage control on part of the industry and producing countries).

The Kimberley Process started when Southern African diamond-producing states met in Kimberley, South Africa, in May 2000, to discuss ways to stop the trade in ‘conflict diamonds’ and ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments. In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the creation of an international certification scheme for rough diamonds. By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the Kimberley Process Certification Scheme (KPCS) . The KPCS document sets out the requirements for controlling rough diamond production and trade. The KPCS entered into force in 2003, when participating countries started to implement its rules. – http://www.kimberleyprocess.com/en/about.

As the conflicts in Sierra Leone (portrayed in the movie) and Angola subsided, the KP remained as public assurance tool. There is some discussion on the future role of the organization; it will undoubtedly remain active, eventually redefining its mission and the meaning of the word “conflict”. As a side effect, the great numbers of small miners not involved in conflicts of any sort will see a fall in their revenues (as the prices they get from their stones are lower, for not being certified) and companies trading diamonds in advanced economies will able to sell ethical diamonds at a premium.

3TG minerals – recent developments

As time went by, those conflicts subsided and ended and the diamond headlines became scarcer, other minerals got the attention of NGOs, the public and legislators. Now it’s time for the 3TG (Tin, Tantalum, Tungsten and Gold) – elements commonly obtained from easily mined alluvial or decomposed rock deposits, the targets being again far away, politically irrelevant, uncivilised countries (definitely not in our backyard – them, not us).

The reasoning is similar, the control of mineral resources is the reason for war being waged in these countries. As a result, the US enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to the use of conflict minerals and the EU will soon follow, adopting OECD guidelines – OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

Doing the right thing

Are these measures needed? Are they effective in their stated objectives? Have we weighted all their effects? Should controls be extended and generally adopted in all internationally traded products, with strict control of human rights compliance? What about the practical consequences (with power shifts, higher prices in complying economies, lower at the source values for small producers) ? Should we forget principles and human rights? What’s being done is it enough or too much?

These are not easy questions: what is right?

Information resources

I have compiled some information on this issue (sources and documents). Just look for them at xmbl.wordpress.com, under Economic Geology, subsection Other Resources .