Global mining major Rio Tinto will compensate its contractor Eqstra Holdings to mitigate the latter’s costs for the two-week force majeure on the Benga coal project in Tete Province, Mozambique.
Eqstra, which operates opencast coal mining at the mine, announced that the company has concluded on certain terms and conditions with Rio Tinto to secure the compensation.
The company’s wholly owned subsidiary Eqstra Mozambique had, on 20 February 2013, received notification from Rio Tinto Benga regarding force majeure on Benga due to flooding and damage to the Sena railway line.
The railway line is the primary transport route for coal exports from the Tete province to the port of Beira.
Eqstra expressed its view that flood damage to the Sena railway line was not a cause for force majeure with regard to the mining contract.
Eqstra CEO Walter Hill was quoted by Business Day as saying that there were other solutions in the contract to halt mining if coal transport to the coast was affected.
"That railway line has technically nothing to do with our contractual relationship," Hill said.
The railway line was subsequently reopened on 4 March 2013, and the company expects to resume mining with targeted full production in the next two days.
Eqstra is under a five-year contract, with two years remaining, to perform waste stripping and coal mining at Benga.