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Mining industry to boost Mozambique

The Kenmare wet
concentrator plant
at night
 
London, England — MININGREVIEW.COM — 06 December 2010 – The government of Mozambique expects its mining sector to increase its share of GDP starting next year, and to boost the country’s economy on the back of more ilmenite output and a planned and dramatic production ramp-up of coal.

Revealing this to Reuters at a business forum here, mining minister Esperanca Bias explained that despite deposits of coal, tantalum and other minerals, the mining sector accounted for less than 5% of the economy, as measured by gross domestic product.

“I hope from 2011, the mining sector can contribute more than 5%, and maybe in the next five years, I would like to see the contribution being more than 12 percent,” she said.

Firms active in Mozambique mining include Kenmare Resources from Ireland and London-listed Ncondezi and Noventa.

Bias said coal production stood at only 500tpa, but that this was expected to rise dramatically.
“After next year, we will produce more than 2Mtpa, and we will export about 2Mtpa,” she estimated, adding that output was projected to peak at 10Mt annually in the future.

Ncondezi plans to produce coal in the Tete province of Mozambique, in the same area where mines are being developed by Brazilian mining giant Vale and Riversdale Mining.

In addition, Kenmare Resources expects a 15 to 20% rise in production of ilmenite next year from its mine in Moma. Ilmenite, mostly used to make titanium dioxide “’ a pigment used in paints, plastics, paper, fabrics and inks “’ accounts for about 60% of the company’s revenue.

Bias went on to say that there were investments of US$1 billion (R7 billion) in the mining sector this year, with more than half of that in mineral exploration and the rest going towards oil and gas.

The government had issued 1 000 licences for exploration of minerals and 13 licences for energy exploration, she added.

It has been encouraging foreign firms to invest in mining through what Bias said were competitive royalty rates, ranging from 3% for coal to 10% for gold.

“We are trying to improve our infrastructure so that when mining companies want to export, the facilities will be there,” she said, adding that two thermal coal plants would be constructed to supply power to mines. A hydropower plant with a capacity of more than 200MW would also be constructed in Tete province for the same reason, she added, without giving an expected time of completion.

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