MAPUTO, Mozambique, February 12, 2021/ -- By Grace Goodrich
In
addition to sizable gas reserves found offshore, Mozambique is home to
commercially significant deposits of coal, gold, graphite, ilmenite,
iron ore, titanium, copper, tantalum and bauxite, to name a few. While
COVID-19 may have disrupted mining operations in terms of site closures
and reduced export earnings, demand for precious minerals and metals has
not faced the same fate as oil and gas. In fact, mining commodities
have risen in the past nine months, due to demand for technology
products (that rely on copper, nickel, graphite, manganese and lithium)
and global green initiatives. To meet the surge in demand for clean
energy technologies, the World Bank posits that mineral production could
increase by almost 500 percent by 2050 and that three billion tons of
mineral and metals will be required to support wind, solar and
geothermal power expansion, along with energy storage.
Mozambique
is well-positioned to take advantage of this market boom, with mining
operations already expanding across Cabo Delgado, Gaza, Manica, Maputo,
Nampula, Niassa, Tete and Zambezia. In addition to raw mineral
extraction, the sector is able to open up opportunities to suppliers
across the value chain, in providing mining and refinery equipment,
maintenance services and machinery and automation equipment. In the
production of coal – of which the country holds some of the largest
untapped deposits globally – service providers will find room to grow
operations through enhanced provision of coal-mining equipment and
railway logistics services. As a result, Mozambique holds extensive
opportunities to add in-country value to mining operations – including
through the establishment of cement plants, alumina refineries and
gas-processing plants – to diversify national economies and give rise to
downstream industries.
Foreign Investors Double Down
The
mining sector in Mozambique has seen several recent large-scale
investments – predominantly from Australian mining firms – that speak to
the sizable returns that the industry has to offer. In the mining and
processing of heavy mineral sands, Kenmare Resources invested $106
million in Q3 2020 in moving its West Concentrator Plant at the Moma
Titanium Minerals Mine in northern Mozambique. Enabling access to the
high-grade Pilivili ore zone, the relocation will allow the firm to
reach its targeted output of 1.2 million tons per annum of ilmenite and
co-products by 2021. The Moma Mine currently represents the
fourth-largest producer of titanium dioxide feedstocks globally. In
addition to contributing roughly 5 percent to domestic exports, the mine
employs over 1,300 Mozambican nationals. Other large-scale operations
include Syrah Resources’ Balama project, which carries a graphite
production capacity of 350,000 tons per annum and accounts for 40
percent of the global graphite market, exporting primarily to China and
the U.S.
Precious minerals remain largely untapped, with gold
deposits in the provinces of Niassa, Tete and Manica drawing growing
attention from local and foreign investors. London-listed sustainable
mining firm Gemfields, for example, invested $130 million into its 75
percent-owned Montepuez ruby mine, which harnesses ruby deposits in
northern Mozambique and produced 1.2-million carats in 2020. Moreover,
the regulatory push from the Mozambican government for artisanal and
smallholder miners to legitimize their businesses may unlock further
commercialized, large-scale mining activities.
Smart Mining as the Future
A
key determinant of mining opportunities in Mozambique and across the
continent is the global energy transition, which has driven demand for
certain minerals needed to fuel electric vehicles and vehicles that rely
on hydrogen fuel cells. Mozambique – as well as Tanzania and Madagascar
– holds substantial quantities of graphite, which is used in the
production of lithium-ion batteries. While green investors have
traditionally excluded mining from their portfolios due to its
association with carbon-intensive coal mining, a more sustainable model
is emerging through the extraction of environmentally friendly
resources. The Caula Graphite and Vanadium Project in northern
Mozambique, for example, is being positioned by its developers as a
low-cost supplier to the vanadium-flow and lithium battery markets that
back electric vehicles and energy storage systems.
On a similar
note, an initiative from the World Bank – Climate-Smart Mining – aims to
ensure that mining is climate-friendly and sustainable for mineral-rich
developing countries, and that benefits of extraction are extended
beyond just crude revenues. Accordingly, the initiative takes a
sustainable resource management approach, focused on utilizing
renewables to power mining operations (instead of diesel or coal) as
well as recycling extracted minerals in a way that yields long-term
benefits for local communities. For rising mining players like
Mozambique, the establishment of a circular economy that maximizes the
full scope of its resources will be integral to building a mining value
chain that serves all stakeholders
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