Legal, illegal Mozambique rubies and legal Angola diamonds in the spotlight

29th January 2016 By: Keith Campbell - Creamer Media Senior Deputy Editor

Mozambique mining company Montepuez Ruby Mining Limitada has made public its concerns about unfair competition by illegal miners.

The company operates a ruby and corundum mine at Namanhumbir, in the Montepuez district, which lies in the southern region of Cabo Delgado Province. It is 75%-owned by British (London Stock Exchange Aim-listed) enterprise Gemfields and 25% by local business Mwiriti Limitada.

Montepuez Ruby Mining chairperson Asghar Fakir told the Notícias newspaper that illegal mining was still a common occurrence in the area, despite a small decline. “The phenomenon is not yet fully under control,” he said. “There are foreigners here plundering the country’s resources without paying taxes. There is a lot of money coming out of Namanhumbir – about 250-million dollars worth of rubies are exported illegally from Namamhumbir annually.”

Company executive Saul Machine urged government to crack down on illegal mining as, unlike his company, the illegal miners did not pay any taxes. “The State is losing a lot of money due to the nonpayment of taxes – money that should be helping develop the country and building public infrastructure such as schools and so on,” he highlighted.

Last year, Montepuez Ruby Mining paid taxes to the Mozambique authorities totalling some 320-million metícais (about $7-million). It was viewed as the best taxpayer in Cabo Delgado and was singled out by the country’s Tax Authority as one of the major contributors to Mozambique’s balance of payments.

The company obtained a 25-year exploration and mining licence from the Mozambique government in February 2012. The licence area covers 33 600 ha. The mine is an openpit operation with a capacity of 100 t/h. Its indicated and inferred resource was reported by the company last year to be 467-million carats at a grade of 62.3 ct per ton of ore.
Up to July last year, the mine’s production had reached 16-million carats. Over its life, which is forecast to be 21 years, the mine is expected to produce 432-million carats. It employs 369 people (318 Mozambicans), 248 contract security staff and personnel employed as a result of civil and drilling contracts.

The first auction of rubies from the mine took place in Singapore in June 2014 and raised $33.5-million. The second auction, in December 2014 and also in Singapore, brought in $43.3-million. The third auction, in April last year, in Jaipur, India, raised $15.9-million, while the fourth (held also in Singapore), in June last year, realised $29.3-million. The fifth and most recent ruby auction, in Singapore, in December, brought in $28.8-million.

Meanwhile, staying with precious stones but moving to the opposite side of the continent, it is reported that Angola’s diamond production this year will come to 8.96-million carats. This will represent a 1.4% increase over the 2015 figure of 8.83-million carats. The figures, reports the Macauhub news agency, come from an Angolan Geology and Mines Ministry document. Of the total production forecast for this year, 8.1-million carats will come from the “industrial” (large, formal, mines) sector and 860 000 ct from the artisanal sector.

Diamonds are Angola’s number two export product, after oil, and the country is one of the five main producers of the precious stones in the world. In December, Angola mined and sold 880 100 ct of diamonds, worth $104.7-million, with an average price of $118/ct. The figure for November was 796 700 ct, with a value of $99.29-million and an average price of $124/ct. In carat terms, December’s production figure was 10.56% higher than that of November. In terms of total value (not ave- rage price per carat), December brought in 5.46% more in revenue than November.