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Mozambique has low tax intake from mining, high-quality graphite deposit unveiled

27th November 2015

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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Although the Mozambique government has given fiscal incentives to multi-national mining and hydro- carbons to encourage foreign investment in the country, its Prime Minister, Carlos Agostinho do Rosário, recently expressed concern about the minor contribution the natural resources sector makes to Mozambique’s tax intake. He was addressing the African Dialogue Forum on Taxation in Maputo. The forum was attended by tax officials, academics and fiscal specialists.

The Prime Minister challenged African tax authorities, including Mozambique authorities, to combat fraud and tax evasion. He suggested that these crimes were becoming more common in the minerals sector. Preventing them would increase State revenues and reduce dependence on external funding sources.

Quite separately, the Australian miner Metals of Africa announced that it has 6.3-million tons of con-tained graphite, plus an estimated 163 000 t of vanadium oxide, in the deposit at its Montepuez Central graphite project, in Mozambique’s Cabo Delgado province. Of the contained graphite, 2.9-million tons com-prised indicated resources and 3.5-million tons inferred resources. These figures are Joint Ore Reserves Committee- (Jorc-) compliant. AIM (the Mozambique News Agency) quoted a company statement that the deposit has “a higher percentage content of large and jumbo flake size than any published graphite resource in Mozambique”.

In its Investor Update Presen-tation on November 16, the com-pany reported that more than half of the Montepuez deposit was made up of large- to jumbo-size flakes. This increases the value of the project. According to the company, for 94% to 97% graphite concentrate, the current price for jumbo-sized flakes is around $2 200/t, for large flakes, it is some $1 250/t, for medium flakes $1 100/t, for small flakes $900/t and for fines $550/t.

“[T]his impressive maiden resource positions Metals of Africa as a major player in the global graphite space,” AIM quoted the miner’s MD, Cherie Leeden, as saying. “Our flake size and quality are exceptional and our deposit clearly boasts the best ratio of large and jumbo flakes of graphite deposits in Mozambique.”

Graphite is used in foundry applications, refractory applica- tions, in steelmaking, brakes, lub- ricants and batteries. A rapidly increasing use is in the manufac-ture of lithium ion batteries. Market demand for natural graphite came to 645 000 t last year. That demand is forecast to increase by 40% a year.

Montepuez lies some 250 km by road west of the port of Pemba, and about 200 km of that road has a sealed bitumen surface. Mined graphite would be exported through Pemba. Nacala, in Nampula province (which borders Cabo Delgado to the south), would be an alternative outlet.

The company also has a project at Balama Central, west of the town of Montepuez (but south-south-west of the Montepuez Central project) as well as in Cabo Delgado. Drilling is under way at Balama Cental and the company expects to have a maiden Jorc resource estimation by the end of the first quarter of next year. High-grade mineralisation has already been found at the surface.

The miner reports that it has started talks “with multiple parties” for offtake agreements for its future graphite production. It is focusing on both the battery and the conventional industrial sector, particularly in Europe and the US. Two end-users of natural and spherical graphite were recently given conducted tours of the company’s projects in Mozambique.

Other miners that are actively developing graphite projects in Mozambique are Syrah Resources and Triton Minerals (while Magnis Resources is developing a project in neighbouring Tanzania). “There is currently more graphite in the Cabo Delgado province of Mozambique than in the rest of the world’s graphite resources combined,” affirmed Metals of Africa in its Investor Update Presentation. (The company is also developing the Kroussou zinc project, in Gabon.)

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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