28 June 2018

Mozambique: Nyusi in Cabo Delgado: Keep Waiting and Work Harder

Photo: ISS
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Gas will create 5000 jobs - but not yet - President Filipe Nyusi said Friday in Palma, Cabo Delgado. He called for patience, and said in the meantime, people must work harder and produce more.

In May there was a demonstration of hundreds of young people in Palma demanding jobs, saying when they applied to the gas companies, their applications were just thrown in the rubbish. And the Bishop of Pemba in a pastoral letter confirmed that gas-related jobs were going to outsiders.

The Anadarko led consortium which has Area 1 nearest to the coast has already started relocating residents from the Afungi peninsula near Palma where it will build its gas liquification plant. It has 1000 workes on site preparing are area, and is expected to have 2500 workers by the end of the year - but it is not known how many will be local.

Nyusi said that the ExxonMobil and ENI will also go ahead with their LNG plant to process gas from area 4 further off shore. Construction of the plants will not start until at least 2020. Eventually these will create 5000 jobs, he said, but many of these will be for outsiders who have been trained. The government is setting up a centre in Palma to train local young people in trades such as carpentry and electricity. In the meantime, loyal youth will have to be patient and work harder.

But patience may be in short supply, and the recent attacks by militant young men are at least partly linked to their frustration at not finding jobs and being forced to become informal street sellers.

Rubies are the red heart of the Cabo Delgado confrontation

Rubies have become a major export; since 2014 rubies from Montepuez Ruby Mining (MRM) have sold for $407 mn. A single auction in early June generated $72 mn. MRM is owned 25% by Mwiriti, controlled by Frelimo leader Raimundo Pachinuapa, and 75% by a private equity company, Pallinghurst, which took over the previous owner Gemfields last year. Other gemstone mining areas have also been concessioned, some to other Frelimo leaders.

But these are huge concessions - MRM has more than 34,000 hectares (340 square kilometres) - and MRM employs 1100 people. But this has totally disrupted local small scale mining, which provided an important income source for young people, explained Zenaida Machado of Human Rights Watch speaking at the Chatham House meeting in London on 20 June.

Northern Mozambique has been a source of a wide variety of gemstones for many years, notably rubies, sapphires, tourmaline, garnets, and spinel. Rubies and sapphires are a very hard form of corundum (aluminium oxide) with chromium giving the ruby its red colour and other trace elements giving sapphires their colours.

Gemstones often occur in gravel beds and layers which are near the surface. The Montepuez gavel beds are 20-120 cm thick, 5 km long, and just 4-7 metres below the surface. This makes them very suitable for small scale mining, which had continued for many years. In 2016 and 2017 visits to Cabo Delgado the Gemological Institute Of America (GIA) found that significant parts to the areas had been - and were still being - mined by small scale miners, who were being forced off by mining companies that had gained licences.

GIA notes that in early 2016 the Mozambican government changed its policy on garimpeiros. "Before 2016 the garimpeiros were, legally speaking, 'informal' small-scale miners. The only legal issue was that they had no license. The police were only allowed to confiscate their mining equipment and question them before releasing them. But in 2016, mining for gemstones or gold without a license became a crime punishable by three years in jail. In February 2017 the government, which was facing major fiscal problems, changed tactics: Instead of taking legal action against garimpeiros, they would target buyers hiding in the towns. Several police operations were launched in Cabo Delgado, and many foreign buyers (mainly Tanzanian, Thai, Sri Lankan, and West African) were arrested, fined, and expelled. Rubies quickly became more scarce in the Thai markets. This probably explains why Gemfields [MRM] had its most successful ruby auction ever in June 2017." Added to this, the Financial Times notes that the ruby has become "the hottest stone in fashion", with top jewellery and fashion designers featuring rubies in the past year. https://www.ft.com/content/06fd57d8-970f-11e7-8c5c-c8d8fa6961bb

For decades, children would search for gem stones on the ground in the forests and adventurous young men would take up small scale mining and trading gem stones, usually selling across the border in Tanzania. This provided additional income to thousands of families which was cut off when miners were driven off official mining concessions and chased by police under tighter laws. Traders and miners found themselves unemployed, and often hanging around towns and trying to earn money as informal traders.

The first Islamist raid was on 5 October 2017 on Mocimboa da Praia.

Gemfields (MRM) accused of human rights violations in UK high court

More than 100 small scale miners and local residents brought a legal action in April in the High Court in London against Gemfields alleging that state and private security forces acting for Gemfields have tortured and killed artisanal miners and burned down houses and forced people to move. The case is being brought by London law firm Leigh Day. Gemfields denies the claims but last month requested a three month delay in the court case to prepare its response.

The abuse was first raised by one of Mozambqiue's best investigative journalists, Estacio Valoi, who with another excellent investigative journalist Luis Nhachote has just set up a website Centro de Jornalismo Investigativo (Investigative Journalism Centre)

And Gemfields pays too little to government

In April the Public Integrity Centre (CIP) reported that Gemfields was paying too little to the Mozambique government because it had not converted its mining concession into a formal mining contract. It also noted that the purchase of Gemfields by Pallinghurst led to the withdrawal of the company for the London Stock Exchange, which made it less accountable because Monepuez was mixed with other projects, and because it was no longer subject to British law on bribery and corruption.

Gemfields replied that it is has paid $34 mn in royalties - 10% of sales - and had various social responsibility projects, and is now listed on the Johannesburg Stock Exchange.

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