Mozambique Mining Report Q3 2008 - www.companiesandmarkets.com adds new report.

2008-09-13 09:11:03 - Mozambique Mining Report Q3 2008 - a new market research report on www.companiesandmarkets.com

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The outlook for Mozambique’s mining sector remains bright, with the national director of Mining Resources, Fatima Momade, stating that the mining and oil sectors should be the primary drivers behind GDP growth hitting around 15% by 2010. Speaking in July 2008, Momade was upbeat on the prospects for the Moma and Chibuto minerals projects, along with the

 

 

Moatize coal project. Some US$217mn was invested in the country’s mining sector in 2007, up from US$169mn in 2005. Momade also said that the main challenge for the government was to ensure the correct reform of current legislation. In this regard, it is expected that new laws on diamond mining are to be passed by the end of the year. The government is also taking steps to speed up the awarding of mining licences, by putting maps detailing existing licence holders online. At present, prospective miners have to apply for mineral licences from local directorates, which then have to go physically through paper records to check whether the area has already been sold off. The government is prioritising the provinces with the most mining activity (such as Manica, Tete, Zambezia and Nampula) but hopes to have the entire country mapped at a future date. There are several high-profile mining projects underway in the African nation, including Vale’s US$1.3bn Moatize coal project, Kenmare Resources’ US$450mn Moma titanium project and Corridor Sands’ Chibuto heavy mineral sands project. Since 2003, the mining industry of Mozambique has attracted increased attention from the private sector. Capital inflows have surged and a number of companies from countries such as South Africa, Russia, Brazil and India are buying stakes in mines throughout the country, signifying the emerging importance of Mozambique’s mining industry in its economy. The diverse geology of Mozambique offers a range of minerals and metals including gold, uranium, titanium, coal and bauxite. The Manica belt spanning western Mozambique is the primary source for the country’s gold, copper, iron ore and lead resources. High-grade bauxite is also found here. In spite of the myriad natural resources that Mozambique hosts, the country suffers from certain infrastructural and systemic flaws. Corruption is high and the labour market is restrictive. Setting up business takes longer compared to other nations in the region, and bureaucratic delays worsen the situation. Mozambique also needs to intensify its efforts to build good infrastructural facilities that will support industrial growth. On the positive side, the government of Mozambique has taken several steps to enhance the prospects of its mining industry. The state has embarked on a mineral export promotion programme to boost its depleted foreign exchange reserves. Furthermore, government policies over the forecast period are focused on improving the administrative structure of mining operations as well as upgrading the health and security provisions. The country’s mining laws have been established with the objective of leveraging its vast mineral base to boost its overseas revenues via large-scale exports. Moreover, since the country houses a substantial number of artisanal miners, the mining laws also aim to promote small-scale mining in the country. Unlike many African countries, the state does not control the mining industry in Mozambique and it is not required to be a participant in mining ventures. Two types of taxation apply to mining operations in Mozambique: production tax and surface tax. Production tax is based on the value of mining output and surface tax is owed annually by all holders of exploration licenses or mining concessions, and is determined on the basis of area. Industry Forecast With a number of large-scale mining projects under way in Mozambique, and strong metal prices around the world, the prospects of the industry look promising. According to BMI, the mining industry of Mozambique is forecast to log an average growth of 9.2% during 2008-2012 and be valued at US$0.38bn in 2012.

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