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Feedstock

As a result of the size of the coal reserves and variety of products mined, it is not feasible to export all the coal present in the Tete region. This 'stranded resource' has resulted in the majority of the mining operations having no usage or market plan for certain grades of coal and as such they have merely stockpiled these products or pushed them back in the pits.

The Project will make use of the lower grade thermal coal (~1.5 million tonnes per annum) and therefore create an additional revenue stream for the mines in the region. Local companies such as Rio Tinto, Vale, Jindal and Beacon Hill have already confirmed a very strong interest to supply the required coal feedstock for the Project on long term supply contracts.

Product Off-take

The Diesel produced will be distributed into the local Mozambican and regional markets to replace existing expensive imports. Currently, 16,000bpd (2012) of Diesel are consumed in Mozambique, all of which is imported. Diesel demand in the surrounding region also collectively exceeds 40,000bpd, all of which is imported via Mozambique. Given the increasing mining activities in Tete, the region is also considered as a high growth Diesel market which is estimated to consume >5,000bpd of Diesel by 2016/2017.

A significant and fast growing regional market also exists for the Urea produced as all fertilizer is currently imported resulting in significantly higher prices (USD800/tonne locally vs USD350/tonne in international markets). As part of the process, low cost power is also produced as a by-product, which enables the Project to be self-sustaining with any excess power being sold to the local market. Mozambique's power demand growth is currently 8% per annum.

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