26 July 2018

Mozambique: Canadian Company Grabs 1000 sq km of Rubies

Photo: Africa Finance Corporation
Mining operations (file photo).

A new Canadian mining company, Fura Gems, has taken over the mining licences of two other companies, Mustang and Regius, to become with largest holder of ruby land in Mozambique, with 1,104 sq km. The land adjoins the successful - and controversial - 340 sq km Gemfields mines. The Fura 16 July and 25 January statements have maps of the ruby areas:

The ruby areas are in Montepuez and the Fura team had previously been working on the Gemfields project. Gemfields is subject to legal action in London for alleged human rights violations. (Our report on Gemfields was on 2 July, newsletter 417)

Fura says its nine mining concessions are 20%-35% owned by "local partners" but no details are given. Former governor and public works minister Felizio Zacarias is chair and Mozambique representative on the Regius group. Zacarias, foreign minister (and former Cabo Delgado governor) Jose Pacheco, and Maputo mayor David Simango own a holding company Conjane with interests in a number of mining ventures. All three are linked to former President Armando Guebuza. Another Zacarias company is Montepuez Mineral Resources.

Montepuez Ruby Mining (MRM) is owned 25% by Mwiriti, controlled by Frelimo political commission member Raimundo Pachinuapa, and 75% by a private equity company, Pallinghurst, which took over the previous owner Gemfields last year, but plans to continue using the Gemfields name.

Rubies and other gemstones had been mined by small scale local and migrant miners, who are pushed off their mines when they are discovered by the big companies, which then claim the land. Thus the ruby mines generate significant wealth for a Frelimo elite and obscure foreign companies, and some taxes for Mozambique. But local communities lose out, with fewer jobs and less income because small scale miners are put out of work.

Local content and jobs

Encouraged by the IMF, World Bank and donors, Mozambique's government has given priority to encouraging foreign investment, particularly in mineral-energy projects, and generating tax revenue (and profits for the domestic top 0.1%, who are mainly in the Frelimo elite). Little attention has been paid to development and benefitting local people with jobs and markets, and local business through contracts.

Mining and gas companies give lip service to local content and employing local people, but then say there are no local companies which can meet their high standards and regular supply requirements, and that local people do not have qualifications. Creating labour skills and competent small and medium businesses can be done in Mozambique as we showed in our book "Chickens and Beer", but it requires three to five years of intensive support and training. http://bit.ly/chickens-beer

The gas companies have known for five years that they would need tens of thousands of workers, who will need to be fed, and that basic building, driving and machinery skills would be needed. But there have been no apprenticeship programmes and no business development programmes - because there was no pressure from government.

After a year of negotiation, the Mozambican private sector confederation (CTA) is still fighting with government over local content. Florivaldo Mucave, CTA deputy-chair for the mineral and energy resources, told a meeting on 11 July that government only wants the law to require 10% local content, whereas CTA wants 25%. http://bit.ly/2JLG8eJ

CTA also called for multinationals to be forced to train and build local capacity, "but we lack the will to do it", Mucave said. He also complained about long work visas for foreign workers. Drillers are coming on 18 month contracts but are given eight year visas, he said.

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