15 October 2013

Mozambique: Major Growth in Mining Sector Predicted

London — Mozambique will see a rapid growth in its mining sector over the next few years, according to a report by Business Monitor International (BMI).

According to a press release, the market report found that the country would be “one of the major growth stories in the global mining sector as a combination of investment into its sizeable coal reserves and a relatively strong business environment coalesce to provide rapid growth in output”.

The researchers “expect the value of the country's mining sector to grow from 263 million US dollars in 2012 to 735 million dollars in 2017”.

This represents a jump from 1.8 per cent of Gross Domestic Product (GDP) in 2012 to 2.9 per cent in 2017.

The report pointed out that the country's coal sector will expand over the next few years. Almost all of the coal mined will be exported, giving Mozambique the potential to become one of the largest global exporters, with India and China the main destinations.

However, the report warned that there are still concerns about the capacity of Mozambique's infrastructure to cope with the projected increase in production.

The report noted, “there have in fact been positive developments, with Mozambique's Nacala port ready to export its first shipment of coal from December 2013”.

In addition, the analysis stated that the government plans to submit a draft of a revised mining law by the end of 2013 in a bid to streamline procedures and attract more investment to its booming coal sector.

It pointed out “the government has stated that its new mining code will not change royalties or mining taxes, and is purely to speed up the licence process and reduce bureaucracy for mining investment, a move that appears to be wholly positive for the sector”.

Last week, BMI brought out a report on risk factors in Mozambique. It estimated that GDP growth would more than double from 7.1 per cent this year to 15 per cent in 2020. This is when BMI expects the country's natural gas fields to begin production.

Recently, BMI estimated that Mozambique would be the fastest growing economy in the world over the next decade. It calculated that accumulated GDP growth by 2022 would be 158.8 per cent.

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