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Mozambique to limit mining stakes
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Sunday, 25 Nov 2012

Reuters reported that Mozambique does not plan to seek overly high state and local participation in mining, beyond current totals of 5% to 20%, to keep attracting vital investment.

While some southern African politicians have campaigned to nationalize mines or demanded that 51% stakes in companies be given to local black people, as in Zimbabwe, Mr Antonio Manhica said that his government would seek to balance the interests of the country with those of investors.

The CEO of the Empresa Mocambicana de Exploracao Mineira said that “In each of the projects, we have 5% to 20% we don't expect to see much change in that.”

That percentage is divided between what is given to the state and what would be sold to local investors, possibly via a listing on the local bourse.

Mr Manhica said that the government was aware of the massive investment needed to develop the infrastructure to support a boom in the coal sector. Railways and ports were severely damaged during the civil war which ended in 1992.

He said that “We still feel that we have to create an environment to attract as much investment as possible.”

But calls for greater benefits for ordinary Mozambicans could change that stance in the long-term and stakes could be raised in the future.

The former Portuguese colony has seen a flood of foreign investment on the back of its coal boom and Mr Manhica said coal seen as a strategic mineral used in power generation was the primary target for state participation.

Major foreign investors in the coal sector include Vale, Rio Tinto, Anglo American, ENRC and Jindal Steel and Power. Coal output is forecast to reach 100 million tonnes per year within a decade from just more than 3 million tonnes now.

Mr Manhica said that there was a large appetite for involvement in mining from local investors and from financiers wishing to support them. The state was concerned, however, that these investments may fall back into the hands of the politically-connected elite if not made sustainable.

He said that Mozambique was learning from the mistakes of neighboring South Africa, where the policy to give greater ownership of the economy to blacks who had been disenfranchised by apartheid benefited a small part of the population with political ties to the ruling party.

He added that “We are still in the learning curve. It's not an easy thing to do.”

Meanwhile, when applying itself for licenses EMEM will target other niche minerals such as titanium graphite and mineral sands. It eventually plans partnership with a private investor to develop some projects while retaining majority ownership.

Source – Reuters


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