The Economist Intelligence Unit (EIU) has calculated that Mozambique has extracted $1.3-billion in capital gains taxes from transactions involving mining and hydrocarbons projects. This is equivalent to 9% of the country’s gross domestic product (GDP) in 2013. The most recent example was in March, when the Mozambican Tax Authority reported it was charging Anadarko Petroleum of the US $520-million in capital gains tax for a transaction in the oil and gas sector.

To date, four transactions involving selling shares in, or complete, projects have been subject to capital gains tax. Six more are under investigation by the country’s tax authorities. Should these lead to the imposition of tax, the resulting revenues to the State could reach the equivalent of 20% of last year’s GDP. One of the transactions under investigation is known to be Rio Tinto’s acquisition of Riversdale Mining in 2011. The others have not yet been disclosed but, as all recent oil and gas sector transactions have now been taxed, the remaining five under examination must be in the mining sector.

However, these tax operations have not deterred foreign investors in the country. “Retroactive taxation frightens foreign companies but we do not expect the current position of the Tributary [Tax] Authority will make investors turn their backs on Mozambique as the tax climate is, in other respects, relatively investor friendly,” stated the EIU. “The large natural gas reserves will attract more foreign investments and new trading partners, especially amongst the large Asian gas importing countries.” The EIU forecasts that Mozambique’s GDP will grow rapidly and steadily over the next few years, from 7.6% this year to 7.9% in 2018.

Separately and independently, the World Bank has predicted that, over the next 15 years, Mozambique could collect as much as $9-billion in all taxes covering the mining and hydrocarbons sectors. This could represent 32% of total government revenues over this period.

The Mozambique government hopes that its revised Mines and Petroleum Law will be approved by the country’s Parliament next month. This was affirmed by Mineral Resources Minister Esperança Bias on May 14. She also stated that the government was planning a new round of bidding for mining concessions in the coal-rich region of Tete province. “Between this [week] and next week, we will open an invitation to tender for the allocation of concessions which belong to companies which have not fulfilled their contractual obligations,” she said. Currently, there are more than 200 mineral exploration concessions that have been awarded in Tete. Most of these are for coal.

But coal, oil and gas are of little value unless they can reach the markets. That requires infrastructure – roads and especially railways and ports. This is something that Empresa Pública Portos e Caminhos de Ferro de Moçambique (CFM) – the country’s State-owned railways and ports company – is very aware of. “We have resources such as coal and gas and the country needs to prepare itself,” recently highlighted CFM board chairperson Victor Gomes. “One of the big problems this country has today is the railway and port logistics capacity.”

Speaking to the media in the port city of Beira, Gomes noted that the country had to urgently develop its infrastructure. He pointed out that his group was expanding the capacity of the Sena railway line (which links the coal mines of the Moatize district of Tete province to Beira) from its current 6.5-million tons a year (Mt/y) to 20 Mt/y. He also cited the current programme to develop a railway link from Moatize, through Malawi, to the Port of Nacala. This involves the construction of 228 km of new track and the refurbishment of 684 km of existing line. The Nacala port was itself being refurbished and expanded and a new oil and gas terminal at Porto de Palma, in Cabo Delgado province, was being developed. (In many of Mozambique’s port and railway infrastructure developments, CFM is a minority partner in joint ventures with foreign private-sector companies.)