African News
Mozambique is Africa's hidden treasure
Posted in our June 2010 issue
African news in the developed world sustain a western perception of a dark and dangerous continent, filled with war, famine, poverty, starving children, tribal massacres, coups and corruption.
But slowly, and with increasing flow, the tide of perception is turning, and Africa is seen as hauling itself from an inconsistent past.
In Mozambique, once left in tatters by war and socialistic mismanagement, the economy, along with quality of life, is making miraculous recovery.
Mozambique is twice the size of California, with a population of around 20-million. The Portuguese took down their colonial flag in 1975, leaving a vacuum into which the country imploded. A long civil war between the Marxist Frelimo and western supported Renamo, raged for nearly 20 years.
In 1989 the dominant Frelimo abandoned Marxism and led the country to its first truly democratic elections under a multi party system. Peace held, and the fragile economy gathered some momentum.
Agricultural riches, supported by significant resources of coal, titanium, tantalum, natural gas and hydro power, soon brought interest from some of the world's larger investors.
Half a million tonnes of aluminium
Central to development has been the establishment of the Mozal primary aluminium smelter. The $2-billion project launched in 1998 has been a phenomenal success. A first phase was completed six months ahead of schedule, and under budget. Shareholders are BHP Billiton, Mitsubishi, Industrial Development Corporation of SA and Mozambique's government.
The official opening was in 2001, and nine months later Phase 2 was launched, completed ahead of schedule, under budget, and commissioned in 2003. This facility now has a capacity of 500 000 tonnes per annum.
Mozal has huge direct and multiplier effects. There are 15 000 employees, spending salaries and wages locally. A new port berth was built, expanding shipping and handling capacity. Contractors employ 1500 people, and a further 10 000 indirect jobs have been created.
The GDP has grown in leaps and bounds, with an average 8.1% per year since 2000. Aluminium and hydro power had moved Mozambique off the bottom of the ladder among poorest countries, and seen it climb 15 places.
Titanium, ilmenite, rutile, zircon
Democratic institutions are established, and elections in 2004 saw a peaceful change from pres Joaquim Chissano to pres Armando Emilio Guebuza. Political risk had receded significantly. Macro-economic data shows GDP growth of 4.3% even in the recession of 2009. Inflation is down from 17.1% in 2002 to 3.5% in 2009.
Investments, principally from Europe, Asia and South Africa, continue. Moma Titanium Minerals plant is working and a $300-m project under the banner of Kenmare Resources Plc, will recover ilmenite, rutile, and zircon from coastal sand.
When fully operational, the mine and plant will produce 800 000 tonnes per year of ilmenite, some 8% of world titanium minerals supply.
BHP Billiton is developing the 500 million USD Corridor Sands Titanium project in Gaza Province.
A $5-b refinery is being built on the coast of Nampula province, and should come on line within seven years.
Natural gas production of 80-m cubic meters per year is running in the Sasol pipeline.
Gold in Manica, and coal exports
AIM and Altex listed Pan African Resources has been exploring for gold in Manica province, and found proven reserves of 1550-million ounces, at 2.6 grammes per tonne, launching plans tot developing a mine.
Brazil's Companhia Vale do Rio Doce (CVRD) is investing $1.5-billion in Moatize coal fields. The target is to produce 26-m tonnes of coking and thermal coal per year, and at full production, to employ 1500 people. The first stone was laid by pres Guebuza in March 2009, and exports, via a revamped Beira coal terminal, should start in 2011.
Tourists are back
In 2006, tourism projects worth $407-m were approved. Job creation and multiplier effects in this sector are significant. Government earned $200-m from 700 000 foreign tourists in 2007.
Nowhere is the new economy more evident than in Maputo, the capital. Construction is evident in every area. Cranes, newly painted offices, warehouses, and homes, road repair crews, and traffic set the tone.
Shops are full, and the demand for equipment, services and consumer goods is constant.
Southern Africa still poses several risks to business, but predictability has improved dramatically. There remain significant opportunities in agriculture, retail, banking, transport, construction, and particularly, in mining.
Darryl Moss is Metso mining distributors and marketing GM.