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Moz plans new resources auctions and communities to benefit from mines

6th December 2013

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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The Mozambique government will hold a new auction for coal mining concessions in the middle of next year. This has been revealed by the country’s National Director of Mines, Eduardo Alexandre. The concessions will be in the provinces of Tete and Niassa and will take place in June. Global mining groups Rio Tinto and Vale already operate coal mines in Tete province, at Benga and Moatize respectively. Regarding Mozambique’s proposed new mining law, Alexandre observed that “I cannot say on what date Parliament will debate the proposed law but I may add that this should happen in the first quarter of 2014”.

Meanwhile, with the coming into effect of the country’s Act 11/2007 and Act 12/2007, local communities in districts containing mines and oil and gas operations will, starting next year, receive a share of the tax revenues generated by these minerals extraction operations. According to the proposed National Budget for 2014, currently being considered in the National Assembly, the communities concerned should receive about 24.4- billion meticais (some $817-million or R8-billion) next year. These funds would be used to fund local development programmes.

The mining operations currently involved are coal and heavy mineral sands. The former are the above- mentioned Rio Tinto and Vale mines, in Tete, while the later is Kenmare Resources’ Moma mine, in Nampula province.

Under Act 12/2007, mining and hydrocarbons companies in the south-east African country are subject to a production tax – based on the value of the amount of the mineral extracted. (This is, of course, not the only tax or impost on the mining and hydrocarbons industries.) It is from this tax that the funds for the local communities will come.

For coal and heavy mineral sands, the production tax rate is 3%. The communities in Tete that will benefit from the coal operations there will be Cateme, 25 de Setembro, Chipanga II and Benga, all in the Moatize district. Together, they should receive some 13.1-billion meticais (about $439-million or R4.5-billion). Tax revenues from Moma will go to the Topuito community in the Moma district. This community should get around 4.3-billion meticais (roughly $143-million or R1.5-billion).

In contrast, the produc- tion tax on natural gas is 6% and on oil 10%. The beneficiary commu- nities will be Maimelane and Pande, both in the Govuro district in Inhambane province. Together, they should get close to 6-billion meticais (around $200-million or R2-billion). However, the vast majority of this (5.6-billion meticais, or $187-million or R1.9-billion) should go to Maimelane.

The Mozambican government expects its tax revenues for 2014 to come from a more diversified base than pre- viously. With a predicted economic growth rate of 8%, the authorities are expecting contributions from the agricultural, construction, mining, natural resources and transport and communications sectors. One of Maputo’s objectives in its Medium Term Fiscal Scenario is the broadening of the tax base. This will include taxing capital gains from equity transactions by mining and hydrocarbons companies.

Separately, Australian miner Triton Minerals has announced that it intends to increase its shareholding in the Anucabe and Balama graphite projects in Mozambique’s Cabo Delgado province from its current 49% to 60%. It will do so over the next 18 months, paying its joint venture partner Grafex $550 000 in cash, in a series of payments, plus five million shares to current Grafex shareholders. Once a definitive feasi- bility study is started, Triton will advance to a 75% stake in Grafex. Should the project enter production, this share will be raised to 80%.

Triton’s licence area is close to that of another Australian company, Syrah Resources. Syrah is now developing its high-grade Balama deposit (not to be confused with Triton’s project), with production expected to start in the second half of 2015.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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