The masseuse felt the broken bones and the scars and asked Chris Cline what he did for a living. Cline said he was in the energy business. What kind of energy?, she wondered. Maybe solar panels or windmills? No, not that, he said. You’re not a fracker, are you? No, not that either. Then what? “I own coal mines,” said Cline. Without a word she stopped working on him and left the room. He waited a while, but she didn’t return. Cline won’t name the resort (“I might want to go back there”). And the scars? From his years underground in Appalachian mines, where the coal seams have been worked so thin it’s like “crawling under a table all day.” Cuts on his back from a mine’s ceiling “felt like insect bites.”
Cline, 59, is one of the most archaic and unpopular specimens of capitalist: the coal tycoon. He doesn’t mind people not liking him. He knows that coal fuels 40% of the world’s power needs. “People deserve the cheapest energy they can get,” he says. “Tell the poor in India and China that they don’t deserve to have reliable, affordable electricity.”
Coal is far from dead. Global demand has dipped because of America’s shale-gas boom and tighter regulations in China, yet it remains 50% above its level in 2000, at 7.2 billion tons per year, according to the International Energy Agency. Even factoring in a carbon tax of $30 per ton, coal can compete on price with natural gas and renewables. And Chris Cline, relying on operating efficiencies that he has honed over nearly 40 years of running his own mines, intends to be the last man standing in the industry, supplying low-cost coal from Canada to energy-hungry consumers around the world.
Cline thinks the carbon crusade is folly: “I’m all for getting sulfur and mercury and nitrogen oxide out of the air – that’s common sense,” but ultimately, he posits, “global cooling” will be a bigger threat. “I believe in our children’s lifetimes that they’ll wish they had paid us per ton to put more CO2 in the air.” (It’s easy to forget that, as recently as the 1970s, fear of a coming ice age was part of the mainstream climate conversation.) Which is why he has no qualms about having built his $2 billion fortune with a series of all-in bets that have taken him from Appalachia to Illinois and now to Canada. He created one of America’s biggest publicly traded coal miners, Foresight Energy, and two years ago sold most of his interest for nearly $1.4 billion. He’s since sunk $150 million into a new mine in Nova Scotia that may produce 500 million tons of high-dollar metallurgical coal by mid-century. And he has permits to develop 1.7 billion tons more at the Vista mine in western Canada.
“If you had any idea where I started,” Cline says wistfully. Trim, powerfully built, 5-foot-11, he speaks in a quiet growl from the back of his throat, as if accustomed to keeping his thoughts to himself. Cline’s father, Paul, was a contract miner in Beckley, West Virginia; he operated rich men’s mines in exchange for a cut of what his team pulled up. When Cline was 6, his dad paid him a penny for each little bag he filled with dirt, which would be used to pack explosives into coal seams. When their front porch collapsed, it became clear young Chris had been excavating dirt from under the house. “It taught me the importance of engineering roof supports,” he says. He first went to work underground at age 15; the miners would hide him when inspectors came. Growing up, did Cline consider himself poor? “How much more poor can you get?”
Cline’s first, battered hard hat sits above the fireplace in his mansion in Beckley. He created a lake here by damming up the hollow; it’s big enough for waterskiing and features a 400-foot waterslide. There’s also a go-kart track and a pasture, where 150-pound Italian sheepdogs keep tabs on livestock – including Fabio, a white stallion that stands at stud in a luxurious stable. Cline has four kids, now grown. His first wife died of cancer; he’s divorced from his second. For four years he dated Tiger Woods’ ex-wife, Elin Nordegren.
Cline’s gun vault holds more than 50 firearms, including a Magnum .44 and a Gatling gun. The Bureau of Alcohol, Tobacco &amp; Firearms comes out once a month to take inventory. A few years back, Cline was the subject of an extortion attempt that threatened his children. “Let ’em come,” he says with a grin. Today he’s armed with a sheaf of papers. There are architectural renderings for his island in the Bahamas and photocopies of old pics. A black-and-white shot shows a young Cline outside the little house where for fun he’d flatten bottle caps under the rails of the coal trains that ran a stone’s throw from the front door. “I’d hitch a ride on a train, hang on for a few miles, then grab one coming back.”
<a href="http://www.forbesafrica.com/focus/2018/03/12/new-kids-mining-block/" target="_blank" rel="noopener">READ MORE: New Kids On The Mining Block</a>
Cline has since upgraded his transportation. He spends 400 hours a year in the air – most of it on his $50 million Embraer Lineage 1000 – shuttling between his homes, making due-diligence tours of mines in Australia and Colombia, or hauling a Forbes camera crew to Nova Scotia, where he has been operating the Donkin mine since April. He applies the same philosophy to his planes as he does to his capital equipment: “We buy the best and run it hard.”
Underground, 1,000-horsepower mining machines rip the coal face with rotating claws; roof bolters hammer steel rods into the ceiling to hold the rock in place. Cline saw early on how much more coal he could produce with reliable equipment. Productivity and profits correlate strongly with uptime. If a vital machine breaks down and needs parts, Cline thinks nothing of sending one of his jets to fetch spares from anywhere on the continent. The math is easy: Every minute his crews are not ripping coal out of the earth equates to hundreds of dollars in lost revenue. And, yes, it’s dangerous. “It used to be brutal,” he says. “We’re trying to get all the hard work out of it.”
In 1980, when Cline was 22, his father had heart bypass surgery, and his partner offered $50,000 to buy him out. “My dad was going to do it.” But Cline had no doubt he could work harder and smarter than anyone else. “I said, ‘Why don’t we buy him out?’” And so they did, borrowing every penny. The first two weeks he worked 16-hour days and never saw sunlight – whatever it took to make his payments. With every success he doubled down. He lays on the table some pictures of himself from the 1980s – grinning, mustachioed, standing in front of an early mine named after his daughter Candice. His first big success came with Pioneer Fuel, a mine he acquired for $1 million and flipped for $17 million.
<div id="attachment_35564" style="width: 510px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-35564" class=" wp-image-35564" src="https://www.forbesafrica.com/wp-content/uploads/2018/03/Chris-Cline-father-300x228.jpg" alt="" width="500" height="380" />Cline&#8217;s father in Appalachia (Photo by Jamel Toppin)</div>
He bought a Lamborghini and a 200-foot yacht called Mine Games, but most of the money went back into the Appalachian ground. He implemented worker-friendly innovations like air-conditioned cockpits for mining machines. And he began handing out daily bonuses in the form of dollar coins, based on how many feet of coal a team had mined that day. “A man can go home and give it to his wife. Or buy some beer,” Cline says. At year’s end he’d hand out checks to cover taxes due. “Those guys would run through a wall for him,” says Andy Fox, an independent mining engineer who first met Cline when Cline pulled up to his office in a red Porsche 928 on the way to the beach and unloaded five bags of coal he needed Fox to analyze.
Still, it’s not enough to be innovative. “You need a little luck,” Cline says. In the late 1990s he had acquired enough reserves to build six new mines. Enron was big in natural gas and wanted to diversify into coal, especially coal trading. Cline got $85 million in loans and equity from Enron to build three mines. After Enron’s 2001 collapse, he bought back the interests for $13 million, then turned around and sold a similar stake to ArcLight Capital Partners for $151 million. By 2003 he was out of Appalachian coal altogether.
The coal industry had watched intently as the EPA cracked down on emissions of acid-rain ingredients like sulfur dioxide in the early 2000s. The quickest way for many power companies to comply was to stop buying high-sulfur coal (e.g., from Illinois) in favor of low-sulfur varieties (like those from Wyoming). Panicked holders of high-sulfur reserves just let their leases lapse and walked away.
Through a new company, Foresight Energy, Cline started accumulating 3 billion tons of high-sulfur reserves in Illinois for less than 30 cents a ton, some of it from the likes of Exxon Mobil. What did Cline know that they didn’t? He believed in technology and was encouraged by power-plant innovations like scrubber systems that capture toxins before they go up the smokestack, enabling them to keep right on burning high-sulfur coal. Plus, he was used to making money on mines with seams just 3 feet thick. Those Illinois seams were 6 feet or thicker. “If it gets to where you can vertically stand up, it’s a lot more pleasant.”
“I didn’t see it as a huge risk,” Cline says. He took on private-equity capital on one condition: no second-guessing. “He didn’t want to be tinkered with,” says Bartow Jones, a partner at Riverstone Holdings, which invested $600 million between 2007 and 2008. Not only did they acquiesce, Jones says, “we insisted on it.” Cline put $2 billion into four mine complexes, which soon became the most productive underground operations in the nation, averaging 13 tons per man-hour at costs of $23 per ton with output of 20 million tons per year.
<a href="http://www.forbesafrica.com/billionaires/2018/03/09/new-billionaire-poor-immigrant-scored-4-3-billion-fortune-cable/" target="_blank" rel="noopener">READ MORE: New Billionaire: How a Poor Immigrant Scored A $4.3 Billion Fortune In Cable</a>
Cline had created a market for high-sulfur Illinois coal. “Coal is not a commodity,” Jones says. “You can’t just shove it into a pipeline like natural gas.” Cline swayed power plants to his coal by paying for their sulfur-catching upgrades out of his own pocket. He acquired docks on the Mississippi and built rail spurs to load coal from 100-car trains directly onto ships bound for India and Europe. Cline needed an exit for his investors. In early 2014 Foresight held an IPO and hit a market cap of $2.5 billion. By early 2015 Riverstone had exited, having nearly doubled its money at a time when many coal giants like Peabody Energy and Alpha Natural Resources were headed toward bankruptcy. Foresight’s relative soundness made it an attractive target for Robert Murray, a 77-year-old coal magnate whose privately held Murray Energy paid Cline a little less than $1.4 billion cash in 2015 for most of Cline’s Foresight stake. The two coal barons had been at odds for years in Illinois, blocking each other via strategic land purchases. Cline stepped down from the Foresight board of directors last March, though he still owns 2 billion tons of Illinois reserves, a slug of Foresight bonds and around 29% of Foresight shares – which have traded down 75% since the Murray deal.
In 2010, as Foresight was hitting its stride, Cline was hungry for something new. He formed a company called Gogebic Taconite that tried to get permits for a Wisconsin iron ore mine on the shores of Lake Superior. But in 2013 the plan ran afoul of the Bad River Band of the Lake Superior Tribe of Chippewa Indians, who farm wild rice in the area. Cline canceled the plans, he says, because of low iron prices. “It will be mined someday.”
Canada was more hospitable. On the day of Foresight’s IPO in 2014, Cline rang the bell on the floor of the New York Stock Exchange, then hopped on his plane and three hours later landed in Nova Scotia to go down into a mothballed mine shaft on the eastern tip of Cape Breton, in a town called Donkin. He was drawn to the huge 12-foot-thick seam and the coal’s high energy content, which at 14,000 British thermal units per ton can be readily turned into high-value coke for steelmaking.
He was also impressed that the highest-risk capital had already been sunk. The Donkin Project was a Hail Mary by the Canadian government to prop up a dying industry; it spent $50 million in the 1980s to bore twin tunnels 2 miles out under the Atlantic Ocean to tap a massive 500 million ton coal bed. By the time the shafts were cut in the late 1980s, benchmark coal prices had dropped (see chart, p. 68). When 26 miners died in a 1992 explosion at Nova Scotia’s Westray mine, it seemed like the end of the industry. But time – and higher commodity prices – heals all wounds. And Donkin was the perfect size for Cline, who bought 75% of it in late 2014 for an estimated $20 million (he’d snap up the remaining 25% the following year).
Since then, 10 of Cline’s old Foresight lieutenants have jumped to Donkin, where they’ve overseen $150 million of investments. That includes a 6,000-hp conveyor system to carry raw coal out of the mine, run it through a cleaning plant and hoist it 100 feet in the air, from which pulverized chunks drop onto jet-black pyramids. In time the conveyors will extend a half-mile to a barge-loading dock. For now front-end loaders scoop coal into trucks that carry it to Panamax-size ships at nearby Sydney. Legendary coal trader Ernie Thrasher is Cline’s partner on the logistics side. He says Donkin’s location, nearly halfway across the Atlantic, makes shipping costs to Rotterdam at least 30% ($5 per ton) less than they would be from central Appalachia. The best coking coal fetches more than $200 a ton today. The simplest way to sum up Cline, according to Thrasher: “He sees value in assets others overlook.”
<div id="attachment_35565" style="width: 510px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-35565" class=" wp-image-35565" src="https://www.forbesafrica.com/wp-content/uploads/2018/03/Chris-Cline-300x200.jpg" alt="Chris Cline" width="500" height="333" />Cline hoped to create 200 mining jobs for distressed Nova Scotia. After layoffs, there are now only 81 at the Donkine mine (Photo by Jamel Toppin)</div>
Environmental opposition in economically depressed Nova Scotia is restrained. “Even those protesting the trucks know the coal is a good thing for the community,” says Paul Carrigan of the Port of Sydney Development Corp. “It’s in our blood.” European settlers mined the first coal here 300 years ago. Through the 1970s mining and steelmaking thrived, employing 20,000 before competition from the likes of China wiped it all out. There’s talk of using some of Donkin’s output to fuel Nova Scotia’s remaining coal plants. With plentiful wind and hydropower, Nova Scotia is well within Canada’s emissions standards.
Even First Nations peoples, like the Mi’kmaq, have been placated with jobs and a royalty on every ton. The mining jobs, paying $100,000 a year, are “an economic lifeline,” says Geoff MacLellan, a rep in the Nova Scotia legislature. But how many jobs will there be? At first, Cline had said 200. But in early November – six weeks after Forbes toured the Donkin site with Cline – the mine laid off 49 of 130 workers. Just a bump at the start of a long road, Cline says. After they did some test drilling for a few months, productivity wasn’t high enough, so they need time to bring in new equipment. Cline is patient. He has no equity partners or outside financing on Donkin. Once the mine is rocking and rolling, within 10 years it could be generating $500 million in annual revenues and putting $100 million in cash into Cline’s pocket. The reserves are vast enough to last for decades.
<a href="http://www.forbesafrica.com/focus/2018/02/28/no-fracking-way-2/" target="_blank" rel="noopener">READ MORE: No Fracking Way</a>
Is there anything that keeps Chris Cline up at night? “Sago,” he says, the name of a West Virginia mine then owned by International Coal Group where in 2006 a methane explosion killed a dozen miners. Initial reports claimed there were many survivors. Which only deepened the anguish once the bodies were found. Then in 2010 came the disaster at Massey Energy’s Upper Big Branch Mine, also in West Virginia, where 29 died. Cline had nothing to do with either incident, though over the years four workers have died in his mines, including his best friend. There are other risks. The Illinois attorney general sued and settled with Foresight for just $300,000 (plus $6.9 million in mine “retirement obligations”) over the pollution of groundwater with toxic coal slurry. Lisa Salinas, a critic of Cline who owns a farm 100 yards from an unlined slurry pond in Carlinville, thinks the settlement is a joke because it “calls for little to no valid mitigation of the existing pollution and, in fact, only encourages more damage.” A Foresight mine near Hillsboro, Illinois, has been shut since 2015 because of a dwindling coal fire.
Cline is amused by the popular misconception that coal is on its deathbed. Yes, coal-fired power plants do continue to close, and U.S. coal output, currently 700 million tons a year, is down 30% from its peak. And yet the U.S. still relies on coal for 30% of its electric power, compared with just 7% for wind and solar combined. Worldwide demand for coal continues to grow, possibly (but not definitely) peaking by the mid-2020s. Policy and technology are the wild cards; Paul McConnell at energy consultancy Wood Mackenzie figures that advances in solar and battery technology plus worldwide carbon taxes have the potential to erode coal demand by 8% a year.
But the death of coal – if it comes at all – will be long and slow. Cline aims for his next project, in Alberta, to be a survivor. He acquired the Vista project via his takeover of the Toronto-listed company Coalspur in early 2015 for an estimated $75 million. The seam is 70 feet thick on the surface, so Cline will build Vista as a pit mine, then go underground to eventually tap 1.7 billion tons. By 2022 it could be doing 10 million tons per year. Cline is cold-blooded when it comes to pushing marginal operators out of business. His Illinois mines took business from Appalachia. His Canadian projects will take business away from Illinois. “I think [Vista] could be the last mine operating after they’ve shut down all the rest of the coal in the world,” he says.
Cline plans to enjoy the rising sea levels in splendor. He recently acquired Big Grand Cay, a 280-acre archipelago in the Bahamas that used to be owned by Bob Abplanalp, inventor of the aerosol spray can. On his iPad, Cline scrolls through plans for a serene resort amid azure waters and non-judgmental massage therapists. It’s too expensive even for this billionaire to haul in enough diesel to keep the generators running, so he’s installing solar panels and researching Tesla batteries, and has three wind turbines on order. “Where it makes sense,” Cline says, “I’m absolutely for it.”

The Last Coal Tycoon

Sure, optimism shone forth in Cape Town like the late summer sun bouncing off Table Mountain, as more than 6,000 powerful people, including more than 20 government ministers, headed for the biggest mining gathering on the planet.
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There were more mining companies this year, up 50% on last year, after more than five years of decline. The keen-eyed investors were back and looking for contenders across the continent. A fruitful place to be for the brave, like the motorbike riding maverick Mark Bristow who has spent the last 20 years making money digging gold in mines from Mali to Cote D’Ivoire. Two decades ago many fellow South Africans may have laughed at Bristow for taking risks far from home, in what many see as barren land for mining, but now they’re laughing on the other side of their faces. At the Mining Indaba, Bristow’s Randgold Resources announced it had increased gold production, for the fifth year in a row, plus it was debt free with more than $500 million in cash. Many mining companies would kill to be in that position.
Among the investors looking to blaze a trail across Africa is the Lagos-based African Finance Corporation that began life, in 2007, with a fund of $1.1 billion and now has assets of $3 billion, according to one of its directors, Osam Iyahen. It is a public-private fund, 42% owned by government, that invests in: oil; gas; resources; infrastructure and power. In January, it broke ground on a $200-million bauxite mine in the Boffa region of Guinea Conakry, just 15 kilometers from the coast, with plans to ramp up to 15 million tons.
“I think there has been a rebound in the industry this year,” says Iyahen in Cape Town.
“Last year was a bit of a disaster. People were not interested in talking about transactions; all they were worried about was protecting their downside. There was a lot of sulking going on.”
You could be forgiven for thinking the host nation is still sulking. South Africa, the biggest mining country on the continent, has been like a boxer on the ropes since the power cuts and global financial collapse of 2008. More than 60,000 jobs have been lost since 2012; capital expenditure ground to a halt and the South African industry lost R38 billion (about $2.8 billion) in 2016 alone, in a year when mining output fell 4.8%.
“We have to get our house in order in South Africa, capital is a coward and it goes to the place where there is least risk. We have to remember mining is a global game now and it is easier than ever for foreign investors to move capital around. Our grandchildren will live with the legacy of what we do now,” says Kieran Whyte, a lawyer and partner at Baker McKenzie, who specializes in energy and infrastructure.
The last few months of 2016 were better as commodity prices lifted, according to the Chamber of Mines, especially the risk haven of gold in the wake of the unpredictable, to put it kindly, presidency of Donald Trump.
“I think we are seeing the green shoots here, we just have to watch out for frostbite,” says Roger Baxter, the CEO of the Chamber of Mines, with a smile on the first day.
Baxter was alluding to two cold fronts: the first, the fact that South Africa – that mined more than a third of the world’s gold – is no longer the king of mining. In fact, in these troubled economic times, more and more nations, from West Africa to South America, are ready to accept foreign investors with open arms. A sign of the times is that, on the eve of the Mining Indaba, analysts in Cape Town were extolling the virtues of the copper, gold and coal mining nation of Chile.
The second frosty front is regulatory uncertainty. The South African government, which has met six times with the Chamber of Mines, has been working on amendments to its mining law since December 27, 2012. It promises to gazette the amended Mineral and Petroleum Resources Development Act (MPRDA) by the end of March; the Chamber of Mines feels it could be April.
<div id="attachment_4588" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-4588" class="size-medium wp-image-4588" src="/wp-content/uploads/2017/04/Mark-Bristow_JC-300x200.jpg" alt="" width="300" height="200" />Mark Bristow</div>
What is likely to be in the bill could cause conflict. It is expected there will be greater ministerial discretion and set in stone that all mining companies have to have 26% black ownership at all times. One of the problems is black shareholders, once they have passed their lock-in date, often cash in their stakes by selling to white shareholders, thus diluting the empowerment stake.
The Chamber of Mines, which represents almost all South African mining houses, disagrees strongly with this. It feels that once mining companies have borne the cost of financing black shareholdings it has done its job regardless of dilution. If this so-called “once empowered, always empowered” principle is accepted, many of the country’s biggest mining houses will be compliant overnight.
“I have never seen the Chamber of Mines so aggressive. Normally they get along to go along, but it seems the worm has turned,” says one mining insider in Cape Town.
It is all likely to end up in court where mining lawyer Peter Leon reckons they have a strong case.
“All they have to do is challenge section 100 of the MPRDA. This gives the minister the power to promulgate the act, but doesn&#8217;t give the minister the right to rewrite or amend the act. That would blow it out of the water,” says Leon.
There appears to be little sign of a U-turn by the government over an issue that could further confuse and deter investors.
“We don&#8217;t want to encourage a place where courts take the place of government. We don&#8217;t agree with the norm that if you don&#8217;t agree with us you take it to court,” says South African mining minister Mosebenzi Zwane.
It’s a cold front that could mean a Chile future.

Beware, It’s Chile Out There

Will the announced nuclear program energize South Africa’s manufacturing and construction?
My background is power engineering. Building power plants across Africa generates as many stories as they do electricity. It is ironic that, in Africa’s most electrified economy, there are tales of powerless people and an economy running out of juice.
Eskom, South Africa’s national power generator, is cooking with gas (turbines) – at the cost of around $78 million a month – while grinding away at the late completion of the new 9,000MW Kusile and Medupi coal power plants. Medupi’s first 800MW unit is generating power and will be on commercial load in September, with up to 1,600MW coming onto the grid each year for the next five years.
Keep your gas cylinders full and your camping lights charged – there’s more to this story!
South Africa has a 40GW-headache to cure in the next 20 years. The first 10GW is merely to match current demand. Generation capacity is 40GW with only about 30GW available due to the UCLF (unplanned capacity loss factor) being high. The national demand is over 40GW as mines and smelters have shut down to help Eskom. Medupi and Kusile will merely tick this box.
The second 10GW is needed to replace the old coal plants before 2025. They have been run hard well beyond their time. The third 10GW is needed to attract investment for growth and the fourth 10GW is for reserve capacity to allow for maintenance.
Coal may be easier and cheaper, but it’s dirty stuff and our economy has to be environmentally attractive to foreign investment. Few investors will stump up if it will worsen their carbon footprint.
So, 40GW in the next 20 years! Simply put, double Eskom. It has to be greener than ever before too – no dirty coal. That means nuclear topped up with clean coal IPPs. Wind and solar may be very sexy but they don’t deliver the big base load power that we need.
Like it or not, nuclear is the leading renewable energy source and South Africa is in play on the global nuclear stage to procure 9,600MW of nuclear power.
Contrary to the naysayers, nuclear energy’s lifetime cost is lower than most technologies, it’s expensive at the start, but cheaper to run.
South Africa’s nuclear regulatory body has defined that only the safest technology will meet the environmental and safety specifications for any new build program.
Russia, France and China are likely frontrunners, but who has the better and safest kit and who can offer a compelling financial deal? That’s where technology, money, politics and common sense meet in a witches brew.
The International Atomic Energy Authority (IAEA) Integrated Nuclear Infrastructure Review (INIR) sets the readiness criteria for building nuclear plants. A nuclear power plant is split into three main sections: The Nuclear Island, The Conventional Island (Turbine) and the Balance of Plant. South Africa is ready to manufacture and construct on the last two sections, which are similar to the local content on Medupi and Kusile, with some nuclear safety alignment.
The nuclear codes and quality standards take a quantum leap in the Nuclear Island and that is where the nuclear certified contractors like Group Five, Lesedi Nuclear Services and the South African Nuclear Energy Corporation (NECSA) are qualified. The country’s industry will have to partner with the successful vendors to hone those skills, train a workforce and learn from the build program in Europe, China and Russia.
There’s a buzz again. Nuclear vendors expected a request for proposals in August with a preferred Nuclear Vendor Country announced by March. Next year will see tendering for the local manufacturing and construction sector, with contracts signed in 2017 and construction starting in 2018.
The capital expenditure for 9,600MW will be approximately $40 to $50 billion, plus government costs and interest on capital. All this leads to trillions being spent over 15 years. That’s a big number that will reignite local industry and a knowledge economy after the last seven years of misery.
Perhaps it will be “boom” again?
&nbsp;
Additional reporting from Des Muller, head of Group Five Nuclear Construction Services.

Double or quit?

Africa’s economic trajectory is often compared to that of China. The Asian country’s ascent to 21st century economic superpower is rooted in its steel production and coal mining industry that began more than a thousand years ago.
As Cecil John Rhodes attempted to consolidate the South African mining industry in the late 19th century, the economic reverberations of the mineral discoveries cemented the importance the mining sector has and continues to play in the economic development of South Africa.
The production of the many commercially viable solid mineral deposits scattered across West Africa is key to the economic development of the region. A successful marriage of policy reform and privatization is fundamental in ensuring the full economic potential of the region is realized.
To date, interest in West Africa has been negligible. According to many of the governmental mining agencies across the region, a lack of geological information available to prospective investors incapacitates their ability to determine the intrinsic value of the deposits. Wildcat miners indulge in a practice known as concession flipping where discoveries are sold at a profit to larger companies who have the technical and financial capacity to develop the mines.
Globally, the mining sector is integral to the development, diversification and sustainment of many economies and is the rock on which a number of industries – from construction to petrochemicals – are built. Like a phoenix arising from the ashes, Liberia and Sierra Leone, both once ravaged by civil war, are keen to develop their mineral reserves. Along with Burkina Faso and Mali, they have been successful in attracting foreign investment for the funding of a number of mining properties.
Located in Guinea, the Simandou hills boast what is thought to be the world’s largest deposits of untapped iron ore. Economic growth in Guinea has been driven by its mining sector. Although the country has high grades of iron ore and low processing costs, infrastructural challenges remain the greatest hurdle to the production of the many reserves. Railways are often the preferred choice of transportation but provide many restrictions in moving for the mined material. In spite of these challenges, political unrest has abated and with mining titans Vale and Rio Tinto setting up in the region, a slipstream has been created for other mining companies to follow suit.
Ghana has managed to develop a stringent fiscal regime that encourages the production of its mineral wealth. Bauxite, limestone and manganese are mined in large quantities, in addition to gold. In the tragicomedy of Nigerian economics, if black gold is the protagonist, the yellow kind and its kin are the antagonists. Beneath Nigeria’s earth sleeps a giant of huge economic potential. Policymakers have thus far tiptoed around the issue of stimulating the sector. Coupled with a lack of geological data, it remains to be seen whether or not the solid mineral sector will have its rude awakening.
As the West averts its gaze towards Africa, proper resource governance will be essential to ensuring prospective investors operate within a legal and fiscal framework to sustain both economic and community development in the countries they operate.

Unearth The TITAN

It doesn’t matter how many capital cities you have flown into; the descent into Maputo never fails to impress. It is a breath-taking expanse of wide, deep water flowing into the Indian Ocean, 92km long and 32km wide, that sparkles in the sun. When Portuguese navigator, Lourenço Marques, surveyed the bay in 1544, on behalf of his seafaring country, tears of joy must have welled up in his eyes. Maputo is a perfect natural harbor made for ships. Marques laid the foundations for the port and lent his name to the colonial city that grew up.
The mouth of the harbor is hemmed in by banks thick with bush, and the blue waters lead right up to the city of Maputo, perched on a ledge of rock above the cranes, palm trees and funnels of the mighty ships in dock. Offshore tankers from Namibia to New York line up for their turn at the quayside.
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They say in Maputo you are never far from the port, and in many ways it dominates the city, home to two million people. It helped pay for the high-rise concrete buildings of this rich city center—or “cemento”, as it is called in Maputo—but for many years it was failing.
In the early years of this century, the port was crumbling to dust after decades of neglect. By 2003, the roads to the port, once among the busiest in Africa, were strewn with rubble. There was barely enough working equipment to load the dwindling amount of cargo. Hundreds of idle casual dock workers lounged by the waterfront waiting for jobs that would never come.
It is a sign of changing economic times in Maputo that private business has been allowed to ride to the rescue with the dash of Zorro. The government of Mozambique invited Grindrod—Africa’s largest shipping company—from South Africa, and DP World, from Dubai, to operate the harbor in return for a stake each.
The turnaround was dramatic.  The number of ships docking in Maputo has doubled, compared to 2003, to more than a thousand-a-year. Coal exports have more than doubled to four million tons and chrome exports are set to reach two million tons this year—five times what they were in 2003. The port is reopening rapidly to trade and now handles everything from citrus fruit to steel from neighboring Zimbabwe.
The change in fortunes, for this key piece of infrastructure, couldn’t have come at a better time to support the rising economic fortunes of Mozambique. The Moatize coalfields, in the north-west corner of the country, are set for a boom; gas has been discovered on the northern coast of Mozambique and BHP Billiton’s Mozal smelter in Matola, south of the capital, is churning out aluminum for export. Rio Tinto has been buying up coal mining assets to add to its international portfolio.
Maputo millionaire Venancio Matusse, an engineer by trade, is one of 42 shareholders in the consultancy, Mozambique Gestores, which manages the port and owns 3% of the free carry business. He said the port is investing $800 million in security and dredging the channel leading to the docks to make way for the big ships. The Maputo River empties into the bay, bringing with it tons of silt that choke the channel.
“A lot of money needs to be spent on the dredging; it is a job that almost never ends,” says Matusse.
“Now the port has all the equipment it needs, but still needs to grow. We need to earn more of the container cargo market because that is where the money is. One challenge is the time goods take to go through the port inspection side. You can take three or four days to clear your goods and that costs money.”
Fernando Lima, a veteran journalist in Maputo, agrees that the port has a long way to go.
“If you look at the container terminal, it is completely congested. Grindrod has attracted a lot of business and now the terminal is facing serious problems of congestion,” he says.
“There is also a problem with bureaucracy, especially when it comes to customs. Delays mean you are losing money as an importer or exporter, which is bad when you have to compete with Richards Bay and Durban in South Africa.”
Even so, millions of dollars are
flowing into infrastructure at the port and another school of thought is that exporters from South Africa—struggling against high cost and a lack of rails at home—could be looking towards Maputo. Either way, to borrow from the words of American writer Mark Twain: reports of the demise of the Port of Maputo have been greatly exaggerated.

Tag: Coal

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