Leticia da Silva Klemens, with no experience in government or of minerals, was controversially named Minister of Mineral Resources and Energy last week, replacing the highly respected Pedro Couto, sacked in September. She was chair of the general meeting of the country’s largest commercial bank, the Millennium-BIM, and chair of the Association of Mozambican Businesswomen (FEMME). In swearing in Klemens, President Filipe Nyusi tacitly recognised her inexperience, arguing that “due to the complexity of the industry, no one is competent enough to satisfy everyone.”
"Anadarko, ExxonMobil and Delonex get Couto’s head on a platter" reported Africa Energy Intelligence (18 Oct). "Very cautious and reputedly incorruptible," the gas and oil companies clearly felt Couto was pushing too hard in Mozambique's interests and delaying their projects. Nyusi came under heavy pressure to dismiss Couto when he talked to oil in gas companies on his visit to the US in September. Both Africa Confidential and Africa Energy Intelligence say Couto failed to win the backing of the Frelimo old guard. MediaFax (19 Oct) said Couto resisted the demands of business networks involving leading figures in the government and party. "They say Couto argued excessively for the interests of the population, when you consider that, today, it is 'politically correct' to also accommodate the desires of the business in the promiscuous relationship between businessmen and politicians." Couto was too careful and too honest.
The 44-year old Klemens is part of the new generation of Frelimo children, and she is in business with the children of the key leaders of the independence struggle: former presidents Samora Machel, Joaquim Chissano, and Armando Guebuza as well as influential figures Alberto Chipande and Tobias Dai.
Exxon close to buying Area 4
The US oil company ExxonMobil is close to taking control of offshore Area Four of the Rovuma Basin, according to Oscar Mitha, chair of Mozambique’s National Hydrocarbon Company (ENH). Mitha told reporters on 20 October believed that the US company would become the Area Four operator, with ENI a minority shareholder. The share purchase will result in several hundred million dollars of capital gains tax to Mozambican, partially easing the current debt and foreign exchange crisis.
The Italian energy company ENI is currently the operator of Area Four, which is owned 50% by ENI, 20% by the China National Petroleum Corporation (CNPC) and 10% each by Galp Energia of Portugal, Kogas of South Korea, and ENH.
Mitha was confident that ENI will announce its Final Investment Decision for Area Four in November, or at the latest in December. ENI and its partners intend to produce liquefied natural gas (LNG) from a floating liquification plant installed above the Coral South gas field.
Earlier this month, ENI and its partners signed an agreement in London to sell LNG to BP Poseidon, a company fully controlled by British Petroleum (BP). The contract with BP covers the sale for 20 years of all the LNG that will be produced at the Coral South facility. This floating factory will have the capacity to produce over 3.3 million tonnes of LNG a year. (AIM En 21 Oct, O Pais 22 Oct)
No Anadarko Area 1 LNG decision for another year
Plans for Anadarko's liquefied natural gas (LNG) plant are moving forward, according to Chair of Mozambique’s National Petroleum Institute (INP), Carlos Zacarias, and Anadarko Vice-President John Grant, at a joint Maputo press conference Friday 21 Oct. This followed a meeting between Grant and Prime Minister Carlos Agostinho do Rosario, which in turn followed a meeting between President Filipe Nyusi with Anadarko in Houston in September. But speaking to reporters earlier in the week, ENH chair Oscar Mitha said he was not expecting a final investment decision until the third quarter of 2017.
A key issue in the meetings last week was the resettlement of people living in the Afungi Peninsula, Palma, Cabo Delgado, where the gas liquification plants (known as trains) will be built.
Anadarko is the operator of Rovuma Basin Offshore Area One, with a holding of 26.5%. The other members of the consortium are Mitsui of Japan (20%), PTT of Thailand (8.5%), and ENH (15%), as well as three Indian companies ONGC Videsh (16%), Oil India (4%) and BRPL Ventures (10%). Area One is estimated to contain more than 75 trillion cubic feet of recoverable natural gas reserves. The consortium hopes to begin LNG production in the first quarter of 2020. Initially, Anadarko plans to produce 12 million tonnes of LNG a year, using two trains, later raising production to 20 million tonnes a year. (AIM En 22 Oct)
Rising mineral prices
Rising coking coal and titanium prices will benefit Mozambican companies. The Irish company Kenmare Resources always seems to lose money despite high production levels. Its mine on the Nampula coast at Moma mainly produces ilmenite (titanium iron oxide), plus rutile (titanium dioxide) and zircon (zirconium silicate). It reports that the main consumer of ilmenite is China and the ilmenite price in China has risen by 70% so far this year. (AIM En 18 Oct)
Coking coal prices have jumped to $245 per tonne, triple the level of $72 a year ago. At this price it again becomes profitable to export coal from Mozambique. (Further Africa 22 Oct) Vale is increasing production and two Indian companies which suspended production are restarting. Jindal has resumed mining in Chirodzi and ICVL is looking for a contractor to reopen the Rio Tinto mine in Benga. (Zitamar 20 Oct, 27 Sep)
Other news
26.6 kilos of heroin were found 21 October by South African customs officials hidden behind the door panel of a minibus which had just crossed to the South African side of the Lebombo/Ressano Garcia border post with Mozambique. (AIM En 22 Oct)
A 12th cement factory has opened , in Metunge, Cabo Delgado, with $24 mn of Chinese investment. National installed capacity is 4 million tonnes per year and 72% of the cement used in Mozambique comes from domestic production. Of the factories, six are in Maputo and the others in Sofala, Nampula and Cabo Delgado. (AIM En 21 Oct)
Companies cannot pay VAT because the Mozambique Tax Authority (AT) ran out of forms in September because it did not pay its bills to the printer. (AIM En 19 Oct)
Zimbabwe owes Mozambique $9 mn for electricity and the Cahora Bassa dam company has threated to pull the plug if it is not paid this year. (Further Africa 22 Oct)
