Mozambique: Government Agrees Coal Contract

The Mozambican government hopes that large scale exploitation of the huge coal reserves at Moatize, in the western province of Tete, will begin in the next three years.

Speaking to reporters at the end of a meeting of the Council of Ministers (Cabinet) on Tuesday, the government spokesperson, Deputy Education Minister Luis Covane, said the government has agreed the terms of the contract that will be signed with Rio Doce Mocambique Ltd, the Mozambican subsidiary of the Brazilian mining giant, Companhia Vale do Rio Doce (CVRD).

“Under the terms of the contract we have just approved, the area granted to this company will be exploited for a period of 25 years, renewable”, said Covane. “The company has guaranteed that the training of technical staff, the mobilisation of equipment and the construction of infrastructures will be completed in 36 months. That means exploitation of the Moatize coal will begin in 2010″.

The investment planned is over 1.5 billion US dollars. 135 million dollars will be spent on training Mozambican staff, while 35 million dollars will be spent on housing, education, health care and other social areas.

CVRD is putting up 170 million dollars of its own money, while the rest of the investment will be financed from bank loans.

The government has agreed that, in the first five years, 30 per cent of the work force at the Moatize mines can be foreigners (much more than the five per cent allowed under the labour law passed by the Mozambican parliament earlier this year).

“But after the first five years, this proportion will be reduced to 20 per cent”, said Covane. “Later we shall authorise no more than 10 per cent. This means we are working so that Mozambican will participate in this project by occupying positions at all levels”.

Covane confirmed that, as part of the concession arrangement, CVRD will grant the Mozambican state a five per cent stake, free of charge, in Rio Doce Mocambique. A further ten per cent of the company can be sold to Mozambican investors.

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