Mining for more than gold
• Chapter summary
For years now, mining has become a hotspot for FDI in Mozambique and a silent engine for growth and development compared to the clamor for gas in the north.
Mozambique’s central and northern regions are rich in mineral resources including coal, precious metals, gems, graphite, aluminum, cobalt, uranium, niobium, and others. Heavy mineral sands (HMS) is a sector that particularly captured our attention for this edition due to its lighter environmental impact and low capital investment requirements. Investors and developers are flocking to what is believed to be “the largest undeveloped HMS deposits in the world,” as noted by David Archer, CEO of Savannah Resources. Graphite and rubies are often quoted as the most abundant precious produce of Cabo Delgado province and are capturing the interest of companies worldwide. One resource that is not attracting the same level of interest is coal. Despite traditionally being Mozambique’s largest export across all sectors, lower prices on the global market combined with a decrease in demand has led the Brazilian giant Vale, as well as other companies in the field, to scale down operations.
In terms of regulation, the current mining regime is fairly new, shaped by the Mining Law (20/2014) and the Specific Regime of Taxation and Benefits of Mining Activities Law (28/2014). All companies we interviewed expressed positive sentiment regarding the regulation enacted and the requirements for foreign companies. Mozambique’s mining space is investor friendly and fairly efficient, which has resulted in the increase in new developers. By 2020, over 2,000 mining licenses had been granted. The country has also made meaningful progress toward full compliance with the Extractive Industries Transparency Initiative (EITI).
With the 2014 Mining Law, Mozambique oversaw the creation of the National Institute of Mines (INAMI). In its short existence, the institute has championed geological research and the mapping of the national territory with the aim of enhancing the information available to investors. So far, 75% of Mozambican territory has been mapped on a 1:250,000 scale, and specific high-potential provinces have been mapped on a larger scale. Moreover, the institute has been pushing for modernization of the mining licensing process through digitalization.
Despite being relatively new, the government is showing the intention to review some issues related to the Mining Law, such as the registration requirement of mining companies in the stock market, as well as the Megaprojects Law, which also applies to mining projects.
A last important aspect that we came across while preparing this chapter is corporate social responsibility (CSR). Despite recurrent criticism of CSR as a façade, CSR in rural mining communities in Mozambique is often a crucial piece of the puzzle. It is also a necessary measure to appease the mounting social tensions stirred by the arrival of foreign interests and foreign personnel. All the companies in this chapter engage in a variety of CSR activities, from primary education and skills training to health facilities, and have professed a genuine commitment to playing a role in the development of the country. ✖