Professional Documents
Culture Documents
Resource Sector Brochure 1
Resource Sector Brochure 1
Mozambique
New Markets - New Opportunities
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ECONOMIC
ECONOMIC DATA
DATA
Economic data
© GAUFF Engineering
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Economic data 2012 to 2018
Due to a political and macroeconomic crisis, growth has recently slowed down.
Yet, the prospects are good. After a decade with an average growth of above 7%
until 2014, GDP growth is expected to peak again in 2018/19. The mining sector
will play an important role mostly with direct investment (DI) coming from abroad.
Foreign direct investment peaked between 2012 and 2014 with a net inflow of
more than 30% of GDP much of it in the mining /natural resources sector. How-
ever, agriculture remains weak as a pillar for development and poverty reduction
and it does not contribute to growth, food security or job creation as it should.
For many years, Mozambique has been characterized by a chronic foreign trade
deficit with little diversified export products and few value addition efforts within
the country. Although some imports led to investment most of the trade deficit is
explained by consumption and did not contribute to more production or import
substitution.
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ECONOMIC DATA
Exports fob (million USD) 3,856 4,123 3,916 3,413 3,351 4,643 4,390
Imports fob (million USD) 7,903 8,480 7,952 7,577 4,856 5,194 5,362
Exports:
The Main markets for Mozambican products in 2016 were:
The Netherlands 25.1%; South Africa 11.9%; India 12.4%;
With the main products: aluminium, electricity, coal, gas, tobacco, sugar, and gem-
stones.
Imports:
The main suppliers in 2016 were located in South Africa 39.3%; PR China 11.7%;
Bahrain 5.6%; the Netherlands 8.3%
With main products: petrol, bauxite, machines, pharmaceuticals, cars, rice, cereals,
and corn.
Investment
The investment climate in Mozambique is relatively stable, which does not mean
that it is good (see business environment). Nevertheless, investor confidence in
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long-term project development is growing again, particularly in the extractive in-
dustries. In recent years, foreign direct investment (FDI) has increased steadily
(31.8 billion USD in 2016). A record inflow of 5.9 billion USD was registered in
2013. Most FDI comes from South Africa, China and Portugal, larger part of this
capital was applied in the extractive sector and associated infrastructure projects.
For the future, numerous opportunities for downstream industrial projects are
arising, such as gas liquefaction (4-6 billion USD), fertilizer production, energy
production, chemicals etc.
In order to attract more industry to the country, the government is setting up spe-
cial economic zones offering tax breaks, for instance in the northern city of Naca-
la. Nonetheless, investors continue to face significant challenges. One hurdle is
the country’s lack of skilled workers, which means companies are forced to invest
strongly into the training of their own personnel. Moreover, companies have often
been expected to rely on their own initiative in terms of infrastructure. On the
positive side it has to be mentioned that rising incomes from the resources sector
are leading to public infrastructure projects.
Business environment
The business environment is still a challenge for Mozambique. Even when com-
pared to regional standards there is a lot to be improved. This applies not only to
the physical infrastructure but also to regulations, bureaucracy, corruption, law
enforcement etc.
• Ease of Doing Business 2017: ranked 138 out of 190 countries
• Corruption Perceptions Index 2016: ranked 142 out of 176 countries
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ECONOMIC
ECONOMIC DATA AND PROSPECTS
STRUCTURE
• World Economic Forum – Global Competitiveness Index: ranked 133 out of 138
countries.
• Hermes Country Risk Rating: 4- high risk
industries accounted for approx. 200 formal companies offering approx. 13,000
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jobs. This is less than 2% of the total formal employment in Mozambique.
However, the natural resources industry has registered fast-paced growth rates
over the past year, and this trend is expected to continue. Especially the gas and
oil industries are believed to contribute to GDP and employment in the long run.
Industries associated with the resource boom in particular are emerging as further
growth sectors. The construction industry is benefiting from infrastructure im-
provements and the installation of international business operations. Transporta-
tion and communications, the energy industry and the domestic financial industry
are also showing strong growth. In contrast, local manufacturing is lagging behind.
Mozambique depends almost entirely on imports of finished products, machinery
and equipment, and on technical and advisory services from abroad. That means
up-grading local industries and linking them to FDI remains a challenge. It has to
be seen what the proposed Local Content Laws will bring.
In regional terms, the greater Maputo/Matola area is still the economic, political
and cultural centre of Mozambique, accommodating most investments and jobs.
Matola, where the Mozal Aluminium smelter is located, is the country’s largest
industrial region.
Mineral and gas production sites are being developed in the central and northern
provinces far from the capital, bringing new economic activity to the under-de-
veloped interior where there is clearly a huge lack of infrastructure and qualified
human resources. There are also logistical needs: Mozambique is traditionally
marked by east-west development and logistics corridors (Nacala, Beira, Mapu-
to). A North-south infrastructure is missing (railway, roads, energy, transportation
service etc.).
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
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and Sofala provinces is already ongoing and planned to be extended. Larger gas
reservoirs have been discovered in the Rovuma Basin, offshore the northern Mo-
zambican coast and exploitation is on the way.
Low prices together with overblown high expectations and an inadequate rail and
port network made coal projects rather inefficient. Amongst the 124 exploration
licenses and 11 approved mining concessions, only four operating licenses have
been issued. Coal mining in Tete became hardly profitable– only large international
corporations with long-term plans and investment kept producing. Since mid
2016 the situation has been improving due to the new rise of the (coking) coal
price and infrastructural amendments. There have been rehabilitation works at
the 575 km-long Sena Railroad Line from Moatize to Beira, increasing its capacity
from 6.5 million tons (t)/year to 20 million t/year. Even more ambitious was the
rehabilitation and partly new construction of the 912 km-long Nacala Logistics
Corridor railway project (CLN), which crosses Malawi and included the construction
of a new coal terminal at the deep water port in Nacala. Overall costs of this project
are 4.4 billion USD. Test transport operation started in 2015.
The biggest producer within the Mozambican coal sector is the Brazil-based
international company Vale, running Moatize 1 and 2 mines. Moatize was the
first coal mine and is Mozambique’s biggest one with a production capacity of
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
18 million t per year. The metallurgical coal reserves of Vale’s Moatize mine are
estimated at 1.4 billion t.
Vale International holds 80% of Vale Mozambique, 15% were sold to Mitsui
(Japan) in 2017 and 5% are locally held. The CLN railway line and coal terminal in
Nacala belong at 35% to Vale and Mitsui each, 30% are hold by the Mozambican
“Ports and Railway Company” (CFM). Of the originally 22 million t of coal Vale had
planned to export 2017, only 18% were transported via the Sena Railway Line
to Beira. A planned increase of produced coal comes along with forecasted lower
production. In the 3rd quarter 2017, Vale’s transported coal volumes were 38%
higher than in the 3rd quarter 2016.
The second mine in Tete is the Chirodzi open pit mine, operated by Jindal Africa,
a subsidiary of the Indian private sector group Jindal Steel Power. Proven coal
Mozambique
reserves are 700 million t, the annual capacity is 3 million t, whereas production
was limited in the last years due to the coal price development. Chirodzi is linked
to the railway network, using the Sena Railway Line to Beira.
The third coal mine in Tete is Benga, run by India’s International Coal Venture
Limited (ICVL), a consortium created to assure the supply of metallurgical and
thermal coal to India. Due to low coal prices, operations had been stopped in May
2016 but were restarted with the rising of coking coal prices in 2017. Until 2016,
35% of the mined material was coking coal, 10% thermal coal and the remaining
55% were rejects. ICVL owns 65% of Benga mine; Indian private sector group
Tata Steel owns the remaining 35%. ICVL also holds 100% of two additional coal
projects, Tete East and Zambeze.
Minas Moatize, formerly run by Beacon Hill Resources (BHR), was operated until
2015 and then suspended.
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Coal Projects in Tete Province
Project Annual production Actual Production Investment
capacity
Vale, Moatize 1 22 million t /year 6.5 million t/year 3.8 billion USD
and 2 (2016) Nacala railway and
port 4.4 billion USD
Jindal, Chirodzi 10 million t/year 3 million t/year (2016)
ICVL, Benga 5.3 million t/year 3.6 million t/year, 50 million USD from
stopped May 2016, Mozambique
restarted 2017
BHR, Minas 0.6 million t/year stopped 2015, 35 million USD
Moatize planned
Source: “Mining Weekly”, presentations of Vale and Jindal
One important project is the “Tete Steel Project” of Baobab Resources, which has
the ambitious target to establish Mozambique’s steel industry, using the 100 m
thick magmatic vanadiferous titano-magnetite ore resources of the Tenge/Ruoni
with an iron grade of 36%. Steel production will be operative close to the open
pit mine and use Vale’s coking coal and local limestone for the steel production.
In addition, an industrial free zone has been established in the area, attracting
industries linked to steel production like re-rolling mills producing specialty steel
products, rail production, ferro-vanadium refinery, prefabricated reinforced con-
crete sections, hydro-electric coal power plants, clinker and cement production,
pigment/paint production utilising titanium by-product, vanadium battery pro-
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
Zirconium is an important raw material for ceramics industry mainly for wall and
floor tiles and sanitary ware. Zirconium is also used in the refractory and foundry
industries.
Mozambique
Ireland’s Kenmare Resources has worked in Moma mine, Nampula Province, since
2007. Ore reserves are 1.52 billion t while resources are estimated at 6.5 billion t.
In 2016, 30 million t of ore have been mined and 1,405 million t of heavy mineral
concentrate (HMC), 903,000 t of ilmenite and 68,000 t of zirconium were extract-
ed. In 2016, HMC production in Moma increased 28%, compared to 2015.
Another ongoing project is Quelimane in Zambézia province, which has been run
by China’s “Africa Great Wall Mining Development Group” since 2012. In 2013,
production started with 30,000 t of heavy mineral sands. The capacity is 600,000 t
per year. Since 2010, the same company has been running under its subcontractor
Haiyo operating a zirconium mining project Angoche in Nampula province with an
installed annual processing capacity of 12 million t of heavy mineral sands.
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projects have formed since 2016 the collective Mutamba consortium project in
Inhambane and Gaza provinces. Savannah’s share is 51%. Resource has been es-
timated at up to 4.4 billion t at a heavy mineral grade of 3.9 % million t. Planned
production start date is 2020. A pilot plant has been opened in December 2017.
Graphite
Mozambique is becoming a center for graphite mining, too. This carbon variety
mineral– classically known for pen mines and lubricants– is actually of rising im-
portance, mainly due to its use with electrodes in batteries, for example for the
growing electro mobility market. Mozambique-based Twigg Exploration Mining, a
subsidiary of Australian Syrah Resources, is developing the graphite deposit Bala-
ma. With reserves of 114.5 million t of contained graphite, it is the world’s largest
graphite deposit. According to the United States Geological Survey USGS, the rest
of the world’s graphite deposits sum up to only 77 million t. Based on given figu-
res, the life of mine (LOM) would reach with a production rate of 2 million t per
year nearly 60 years. During the production phase, which is planned to start in
2018, the number of employees will be approximately 200.
Further to the East of Cabo Delgado, the Dutch-German company AMG Graphit
Kropfmühl (AMG GK) took over the existing Ancuabe graphite mine that had been
closed in 1999. The mine was reopened in June 2017 after an investment of 12
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
million EUR. The capacity of the mine was increased from 6,000 to 9,000 t of
graphite per year.
Tantalum
The Highland African Mining Company (HAMC) closed their Marropino mine in
Zambézia province in 2013 due to high production costs. Exploration plans in
Morrua mine have not been transacted yet. Morrua mine in Zambézia represents
one of the largest tantalum reserves in Mozambique, bearing reserves of 7.5 mil-
lion t of ore grading 0.07% tantalum.
Ruby
A special type of mining is Montepuez Ruby Mining Lda. (MRM) in Montepuez,
Mozambique
Cabo Delgado province, because mining for ruby and corundium is done in grand
industrial scale here. Usually, this kind of gemstones mining is done in a smaller
scale and mostly by artisanal miners. 75% of the project is owned by Gemstones
Lda. and 25% by Mwiriti Lda. The open pit mine provides the technical capacity
to move 150 t of soil per hour. MRM has invested 70 million USD into the project,
excluding taxes and royalties of up to 55.3 million USD paid to the Mozambican
government in 2016.The mine is expected to exploit 10,000 ct (metric cerate) of
rubies per year. 322 workers have been listed so far (2017).
Gold
Manica province is Mozambique`s main gold exploration area, where mining is
done by artisanal miners. Small-scale gold mining is also found in Tete, Niassa and
Cabo Delgado provinces.
Clean Tech Mining in Manica has done ongoing large-scale gold mining since 2014.
The processing plant has a capacity of 50 t of soil per hour. The mine employs
around 200 permanent workers. The complete investment was 3.5 million USD.
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UK-based XTRACT Resources acquired Manica Gold Project from Australian Auroch
Minerals for approx. 11 million USD, excluding the 700.000 USD taxes in 2016.
The company assumes that in 7 years 3.3 million t of ore will be processed from
both open pit and underground mines to produce 215 koz gold (6,095 kg). The in-
dicated resources are 782 koz (22169 kg). Operations started by the end of 2017.
Exploration for alluvial gold is also ongoing, e.g. by Chinese Republic Gold at
Mucurumazi, Manica province.
Phosphate
Evate deposits at Monapo in Nampula province would allow an annual production
of 2 million t of phosphate. In 2014, Vale abandoned the project, which would
require an investment of 3 billion USD. In 2017, INAMI invited investors to submit
proposals. Another deposit is Muande in Tete province.
Nickel
In 2012, important nickel reserves of estimated 23 million t have been discovered
in the area of Montepuez, Cabo Delgado. Another deposit is the Mavita copper-
nickel-cobalt project in Manica, from which Rio Tinto withdrew. An exploration
licence had been given to Canada-based AXMIN in 2010.
Diamond
In 2017, exploration results suggested the existence of kimberlites in Gaza pro-
vince, which might bear diamonds. Further exploration is ongoing.
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
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Resources Production Investment
1,764 million t 33 million t per year from 7/2018 471 million USD
4.4 billion t, 3.9% total heavy Planned: 574,000 t per year 226 million USD
minerals
Reserves: 114.5 million t with 2 million t per year to process 193 million USD
16.6% TGC (total graphite 380,000 t per year graphite concen- + 7 million USD
content) trate contingency
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ECONOMIC DATA
OPPORTUNITIES IN THE NATURAL
RESOURCES SECTOR
Gas
Mozambique’s onshore natural gas production is operated by South Africa’s Sasol
in Inhambane province, which holds proven reserves of 2.6 trillion cubic feet (TCF).
The liquid natural gas is produced and processed at a central facility in Temane
before being transported to South Africa. Gas for domestic use is transported to
southern Mozambique.
In addition, Sasol started to develop its Production Sharing Agreement (PSA) li-
cense in 2016. The PSA development is an integrated oil, liquefied petroleum gas
and gas project in northern Inhambane province. The first phase of the project
includes 13 wells and an LPG production facility at an estimated cost of 1.4 billion
USD.
Mozambique
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A new chapter in Mozambican his-
tory is about to start in 2019 with
the offshore gas production on ma-
jor scale. USA’s Anadarko and Italian
ENI have discovered resources of far
more than 100 TCF in the Rovuma
Basin, which spreads offshore from
Cabo Delgado province and contin-
ues further north off the Tanzanian
coast. Anadarko recently invested
770 million USD into its offshore ac-
tivities. The total investment sum is
reported to be 30 billion USD. Share-
holders are Anadarko (USA) with
26,5%, Mitsui (JAP) with 20%, ONGC
(India) with 16%, ENH (Mozambique)
with 15%, Bharat (India) with 10%,
PTTEP (Thailand) with 8,5% and Oil
India Ltd. with 4%.
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ECONOMIC
ADVISORY DATA
SERVICES AND SUPPORT SCHEMES
www.germanchamber.co.za
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Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
As a German public-benefit federal enterprise, GIZ has been involved in interna-
tional cooperation for more than 50 years. A large proportion of its commissions
are carried out on behalf of the Federal Ministry for Economic Cooperation and
Development (BMZ), but GIZ also works for other federal ministries and public
and private partners in Germany and abroad. It is currently active in more than
120 countries.
Between 2013 and 2017, GIZ ran together with BGR, a programme that aimed to
strengthen the natural resources sector by improving governance in the mining
sector. Main tasks were:
Since 2017, GIZ’s support to the extractive sector in the country has continued
within the Good Financial Governance Programme. The focus is now on the trans-
fer of 2.75% of revenues from the mining, oil and gas industries to the develop-
ment of local communities as well as on safety in mines
https://www.giz.de/en/worldwide/320.html
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ECONOMIC
ADVISORY DATA
SERVICES AND SUPPORT SCHEMES
Since 2013, BGR has been running a BMZ-funded project with MIREME to strength-
en public management in the mining sector, which is linked to GIZ’s activities.
Main components are:
Mozambique
https://www.bgr.bund.de/EN/Themen/Zusammenarbeit/TechnZusammenarb/Projekte/
Laufend/Afrika/2002_2012-2520-0_Mosambik_Staerkung_Bergbausektor_en.html
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Opportunities are thus opened up to German export companies wishing to pro-
mote their products in challenging future markets.
www.kfw.de
develoPPP.de
Through the develoPPP.de programme, the German Federal Ministry for Economic
Cooperation and Development (BMZ) provides companies investing in developing
and emerging countries with financial and, if required professional support.
The partner company is responsible for covering at least half of the overall costs;
BMZ contributes with up to a maximum of 200,000 EUR. These development part-
nerships with the private sector may last up to a maximum of three years and
cover a wide variety of areas and topics.
BMZ has appointed three public partners to implement the programme on its be-
half: DEG, GIZ GmbH and Sequa GmbH. Companies taking part in develoPPP.de
always cooperate with one of these public partners.
Companies are invited to register their interest with DEG, GIZ or Sequa by partici-
pating in one of the ideas competition held four times a year. These are open to all
German and European companies and their subsidiaries in developing countries
as well as emerging economies. Development partnerships with the private sector
with the potential to achieve outstanding development benefits and involve sev-
eral countries may receive more generous funding as Strategic
Development Partnerships.
www.developpp.de/en
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ECONOMIC
CONTACT DATA
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