Mozambique Open for Mining Business: Minister

Wednesday, 07 September 2011

Background

The Indian Ocean littoral state of Mozambique is making moves to capitalise on its underdeveloped resources sector. Although a small number of Australian miners are already active in the country, the Mozambican Government is aiming to attract more mining companies by finetuning its foreign investment regime. 

Comment

Speaking at day two of the Africa Down Under mining conference, held in Perth from 31 August – 2 September, Dr Abdul Razak Noormahomed, the Mozambican Deputy Minister of Mineral Resources, outlined the opportunities available in Mozambique’s resources sector. He also spoke of his government’s plans to refine its mining laws. Mining Law â„– 14/2002 is currently being reviewed; as is Fiscal Incentives Law â„– 13/2007, which covers mining and hydrocarbon operations.

Although the government has held discussions with miners and other stakeholders, some uncertainty remains. The corporate tax rate is 35 per cent, with additional levies charged according to mineral type. Diamonds, for example, currently attract royalties of ten per cent; gold and other gemstones, five per cent; coal and iron ore, three per cent. Whether these rates will change is not yet known.

As Dr Noormahomed noted, however, Mozambique offers a number of other incentives to attract miners. A five-year exemption on import duties and Value Added Tax for mining equipment; the repatriation of dividends; and 25-year renewable concessions, are all on offer. An online cadastre system has been introduced in four provinces, with more to follow.

The country is in the process of becoming a member of the Extractive Industries Transparency Initiative (EITI), a multinational approach to achieve greater transparency of payments and revenues from the resources sector. As Dr Noormahomed pointed out, Mozambique offers foreign investors a favourable investment framework and a government committed to orthodox macroeconomic policies.

To maximise the benefits from the minerals sector, the Mozambican Government is encouraging companies to develop health, education and water supply facilities, as part of their projects. Despite the additional costs, most companies appear happy to comply as, in many cases, the existing infrastructure is minimal. Partnerships with Mozambican companies are also encouraged, as are training of more Mozambican personnel and increased local content.

Mining accounts for only around five per cent of economic activity in Mozambique, and the sector is underexploited. The country is known to have reserves of coal, gold, graphite, ilmenite, tantalite, phosphates, copper, zinc and mineral sands. Large natural gas reserves have also been located in the north of the country.

Several Australian companies are already operating successfully in Mozambique. Among those active in the coal sector are Riversdale Mining, Mozambi Coal and Sedgman. Perth-based Globe Metals and Mining is in the early stages of a project to mine fluorite and rare earth elements at Mount Muambe. Other opportunities lie in the development of infrastructure – particularly the construction of road and rail networks – and mining support services and software.

Leighton G. Luke

Manager

Indian Ocean Research Programme

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FDI attended Africa Down Under as a guest of the conference organisers. We extend our sincerest thanks to them for facilitating our visit.