Mozambique:
the perfect economic storm
Roelof van Tonder asks whether an economic upswing is developing in Mozambique.
Coal was first discovered in the Tete province of Mozambique
in 1859. At the time, coal was mined by Mozambicans from an
outcropping seam on the bank of the river Muntizi. Associates of
Dr David Livingstone described the coal in Tete as free burning
with little sulphur and iron. zircon. In the pegmatite spread throughout Nampula Province
and Zambézia Province, mineral resources such as tantalum, rare
earth elements, and precious stone can be found. There is the
possibility of phosphate mining in the Monapo area, which is
located 100km east of Nampula city.
Fast forward to 2018 and one can safely say that it is only in the
past two years that the estimated reserves of more than six billion
tons are starting to work in favour of Mozambique and Vale, the
most prominent investor in this area. Vale has invested in a mine,
railway line, and coal terminal at Nacala. Further development of graphite in Cabo Delgado Province
and in Malawi is a real possibility. Recently, an Australian
junior announced its intention to develop a graphite mine in
Malawi and to use the rail infrastructure to Nacala for exports.
Phosphates can be found in areas 30km north-west of Tete in
Tete Province. We are also aware of several projects to develop
iron ore deposits 30km north-east of Tete, while proven fluorite
deposits are located in the south of Tete Province.
The region has gone through some tough times, illustrated by the
fact that in 2014, Rio Tinto sold its coal assets to International
Coal Ventures Private for USD50-million, a fraction of their
purchase price of USD3.7-billion three years earlier.
As with coal, the discovery of large reserves of gas in 2010 has
been a roller-coaster ride, with depressed gas prices, unsecured
debt, and other issues delaying progress. The tide started to turn
in 2017 when the final investment decision (FID) was reached
on ENI’s floating liquefied natural gas (LNG) plant and when
Exxon Mobil bought a 25% stake in ENI’s reserves. FID is now
widely expected/predicted for 2019. Gas may start to flow as
early as 2023.
Africa House has just returned from a visit to the Nacala region
and, other than the fact that coal is now being exported, the most
important development is that the coal export railway line has
ensured a situation where a whole new set of rail assets has been
granted on concession to the private sector. This rail network now
includes additional lines that link Nacala with Lichinga in northern
Mozambique and Chipata in Zambia, with the distinct possibility of
linking up with the Copperbelt in Zambia and the DRC.
This extension of the rail network could, in the longer term,
transform the mining industry in the entire subregion. According
to various sources, Mozambique has the potential to develop
further mineral sands along the coastal area from Cabo Delgado
to Zambézia Province, which contains ilmenite, rutile, and
www.africanmining.co.za
All these projects are now more viable because of the rail
infrastructure that has been developed on the back of the coal
deposits. In Moatize, the waste produced from the coal mines
can be reused for the generation of electricity, for supplying
Vale’s operations, and for contributing to the local and regional
population’s energy supply.
It can be argued that the LNG projects could have a similar
effect on the regions north of Nacala in terms of infrastructure
and, most importantly, on rising incomes and the demand for
energy as well as goods and services.
Energy is at the centre of Mozambique’s development potential,
with coal and gas of course being the highlights of the show.
The recently published Energy Master Plan for Mozambique is
prioritising the country as a regional energy hub and they are
planning a range of interconnected projects with Zimbabwe,
Zambia, Malawi, and Tanzania.
Nacala is strategically located in terms of the location of these
commodities. From a business development perspective, the
region served by the Nacala Corridor is definitely a region to be
prioritised. It is, therefore, not inconceivable to say that a perfect
storm is brewing, which will stoke development fires in this
region for many years to come. b
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