A well-established mining industry with large potential

September 13, 2024

Geert Klok, chairman of the board of the Chamber of Mines of Mozambique (CMM), talks to The Energy Year about the diverse factors that make Mozambique attractive for international mining companies and preparing domestic operators for upcoming supply chain certification requirements. The CMM is a mining sector organisation that co-ordinates private-sector actors in Mozambique and represents their interests to the government.

Can you discuss the main factors that make Mozambique attractive to mining companies?
Mozambique’s mining sector holds immense potential. The country boasts a diverse range of resources which includes traditional ores such as coal, critical raw materials such as graphite and precious minerals such as gold and rubies. Much of this wealth remains untapped, and exciting opportunities exist for new mining ventures.
The country’s geographic location is very favourable. The mining business is mostly based on exports and Mozambique has created corridors through Maputo, Beira and Nacala for the transport of minerals to ports along the coast where they can be shipped to overseas markets in Asia or Europe.
There’s also proximity to South Africa, a traditional mining jurisdiction with a critical mass of suppliers and know-how. Mozambique itself has a well-established mining industry with ecosystems of suppliers and subcontractors in Tete and Pemba. The country offers ample support for new mining endeavours and the CMM can of course also assist new businesses venturing into our sector.

What are some trends the CMM has observed in Mozambique’s mining sector?
The pace of development within our sector is heavily influenced by both global market trends and capital availability. Existing infrastructure is allowing coal production to remain steady, but the energy transition is making it challenging to attract financing for new coal projects.
Graphite is emerging as a promising mineral, though several mining and processing developments are being held up by a recent slowdown in the global graphite market and the insurgency in Cabo Delgado, where most graphite deposits are located.

 

What are some of the challenges currently affecting the Mozambican mining sector?
The infrastructure along Mozambique’s main transport corridors needs to be reinforced. Given the country’s vast size, road construction and regular maintenance are essential. Access to electricity is also an issue, as many mining companies are located in remote areas that lack proper access to the grid.
Many operators in the sector strive to utilise clean energy from sources such as the hydroelectric plant in Cahora Bassa or any of Mozambique’s several solar installations, but this goal still remains out of reach for some of our members.
The sector faces regulatory challenges as well. We hope to make the mining cadastre more efficient and reduce the delays our members experience with mining applications. There is a capacity problem, but there is also an excess of bureaucracy that could be simplified. The operators also face issues with taxes and delays in VAT reimbursement. I must say, however, that many of these issues are not unique to Mozambique.

What is your assessment of Mozambique’s licensing process?
Licences are awarded on a first-come, first-served basis. The cadastre provides information about the areas that are available and those that have already been claimed. Larger operations typically begin with a prospecting licence which grants exclusive rights to explore a specific area for five years, with a potential three-year extension. If the prospecting is successful, the company can apply for a mining concession to conduct full-scale mining activity in the designated area.
Operators are required to show that they have adequate financial capacity and expertise, and they must submit a work plan and a performance bond. Unfortunately, applications can become stuck in the system for many years. The approval process includes asking provincial authorities for an opinion, as well as checking for other claims on the area and verifying that there are no conflicts with farming or other existing activities.
These are necessary checks, but they sometimes take an amount of time that we consider excessive. I know of licence applications that have not been granted for more than 10 years. This not only disrupts planning and resource allocation by mining companies but also hinders national development. Mining areas remain unattended, preventing legitimate claimants from making productive use of them and potentially leading to illegal mining operations.

How does the CMM promote best practices and development in Mozambique’s mining sector?
The CMM actively promotes responsible mining practices and helps prepare the industry for future challenges. We have a multi-year project with the Chamber of Commerce and Industry of Chemnitz that targets the small-scale mining sector. We have conducted training in Tete and Maputo on health and safety, environmental best practices, human rights and women’s rights. In the next phase, we will expand to other provinces.
We also help our members prepare for upcoming developments and requirements. For example, the EU is passing legislation on supply chain certification. Operators will need to show where the inputs to their production have been sourced, and they will have to demonstrate that they have been sourced according to EU environmental and human rights standards. We will be organising workshops to educate our members who wish to export to Europe and help them prepare.

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