Agencia de Informacao de Mocambique (Maputo)
19 May 2006
Maputo — The tobacco giant Alliance One is pulling out of Mozambique in 2007, reports Friday's issue of the independent weekly "Savana".
Alliance One was formed out of a merger between the US-based companies Dimon and Stancom, both of whom held concessions in the Mozambican provinces of Niassa, Tete and Manica. They provided peasant tobacco growers with inputs, and purchased their crop.
The reason for the Alliance One decision to withdraw is that the most productive tobacco concession, in the Tete district of Chifunde was taken from Dimon in 2005, and given instead to Mozambique Leaf Tobacco (MLT), a subsidiary of the US Universal Leaf Africa Company.
Although "Savana" finds the government decision to switch the concession from Dimon to MLT "strange", the reason is extremely clear. The government wants tobacco processing to happen in Mozambique, and so urged the concessionary companies to build processing plants. Only MLT responded, and has built the second largest processing plant in Africa in Tete City. Its reward was the Chifunde concession.
Alliance One took the decision to pull out on 16 March: a brief note from Alliance One explained "The company reviewed its remaining operations without Chifunde district and determined it was not in the company's economic interest to remain in Mozambique without this strategic district. Consequently, after the 2006 crop, for which the company has already made significant commitments, operations within Mozambique will discontinue".
Thus Alliance One will close its three facilities in Mozambique. The company estimated that over 500 of its staff would be affected, and that Alliance One would incur costs of around six million dollars, including redundancy payments and "asset impairment".
"Savana" says that Alliance One has told the Ministry of Agriculture that this year's campaign will continue to the end without hindrance. So peasant growers in the Alliance One concessions should have no difficulty in selling their crop this year.
For 2007, everything seems to depend on whether MLT is willing and able to take over all the Alliance One concessions.
It would seem to be in MLT's interests to do so, in order to maximise the raw material for its Tete factory.
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