ETA Star, a conglomerate based in Dubai, and its joint venture partners have discovered coal reserves in Mozambique as the company diversifies its investments away from property.
A total of 2 billion tonnes of coal reserves were discovered at ETA Star Mozambique's concession in the north-western Tete province, which covers an area of 4,000 hectares, Bloomberg News reported, citing a report in Noticias, a Mozambique newspaper. Production is expected to be 5 million tonnes a year. The discovery is the latest move by a regional investor into African minerals, a market yet to be fully developed.
In addition to mining, ETA Star has subsidiaries in industries including property development and health care but some of its investments have underperformed since the global financial crisis. The ratings agency Standard & Poor's last year warned that the firm may have difficulty meeting its financial obligations.
ETA Star Mozambique is a joint venture between ETA Star, Indico Investments and Minas do Zambeze of Mozambique. The venture has been carrying out coal prospecting and surveying work in the Moatize coal region. It was reported this year that the firm had invested US$15 million (Dh55m) in the venture, which is expected to rise to $35m when production begins.
Moatize is a popular region for investment, with several other countries surveying the ground for coal. Reserves in the area are estimated at 975 million tonnes of mineral coal.
Several Gulf investors have already begun to carve openings into the wealth of African resources. A commodities price boom earlier in the year sparked renewed interest in investment in areas ranging from gold to cocoa.
Mohamed Alabbar, a businessman based in Dubai, has signed deals to mine metals including gold and bauxite in Africa as his company, Africa Middle East Resources, becomes the latest company plugging into the global commodity supply chain.
It already has operations to mine oil and gas in Uganda and Gabon, uranium in Niger, gold and coal in Madagascar and gold, iron ore and bauxite in Guinea.
Earlier in the year, Abu Dhabi's Aabar Investments agreed to invest up to $1 billion in an initial public offering by the commodities trader Glencore International. Aabar's investment will give it access to a company with a huge grip on the market.
No one from ETA Star was available for comment yesterday.