Clashes at coal mine owned by Vale in Mozambique

Hundreds of protesters blocked the entrance to a coal mine in Mozambique owned by Brazil’s Vale (NYSE:VALE), in a dispute over a compensation deal agreed upon after they were relocated, reports AFP.

The demonstrators demanded further compensation for being uprooted five years ago to make way for the colliery, but Vale reportedly said it has already done enough, paying out about $2,000 to each person affected.

The demonstration broke out on Tuesday after more than a year of negotiations between the company and the protesters, who were resettled in 2008 to make room for the Moatize mine.

Vale moved then about 5,000 people in order to set up its mining operation in the coal-rich northwestern province of Tete.

"When Vale came to Mozambique the government told us, you will get very rich. That is why we want the company to pay us what it owes us," one of the protesters, Maxwell April, told AFP.

First production from the expanded mine is expected in the second half of 2014.

Threats to the country's coal rush 

Mozambique’s coal industry has faced a number of challenges in recent months. In February the Rio de Janeiro-based firm declared "force majeure" on coal shipments due to the two-week shutdown, invoking clauses in supply contracts covering disruptions beyond its control. It didn’t lift it until late last month.

A few days alter, Anglo American (LON:AAL) decided not to proceed with the acquisition of a 58.9% interest in the $555 million Revuboe metallurgical coal project.

Then a mine run by Rio Tinto (ASX, LON:RIO) also halted operations, leaving rows of empty railway wagons at Dondo, about 20km from Beira. The company took a $3-billion writedown on its investments in the country as concerns over logistics grow.

Based on industry leaders' estimates Mozambique needs close to $20 billion to revive its railways and ports, a cost that seems too high for a country the United Nations lists as the third poorest in the world.

Image: screen grab from DW Documentary “Mozambique’s Coal Rush”