July 6, 2011

Government demands shares in mining concessions

Mozambique is to review its current mining legislation to enable the state to hold a share in the companies with mineral concessions. Speaking at the opening of an International Coal Conference, the Minister of Mineral Resources, Esperanca Bias, said that discussions were taking place on revising the Mining Law which had been in place since 2002. "The state should have a share in consortia or businesses holding mining concession for strategic mineral resources, such as coal", said Bias. According to the minister, the state would have a stake in the concessions through the company Empresa Moçambicana de Exploração Mineira, SA (EMEM). She stated that various aspects of mining legislation were under discussion, one of which was related to the need to tax capital gains resulting from the transfer of mineral concessions.

This is particularly relevant to the recent fight for control over the Australian company Riversdale Mining by Rio Tinto and Tata Steel. Riversdale has enormous coal concession in Tete province, which is now effectively controlled by Rio Tinto. The Mozambican state earned nothing at all from the sale of the Riversdale shares, though the only reason those shares shot up in value was because of Mozambican coal. "As owner of the mineral resources, the state should also share in any benefits resulting from the transfer of mineral titles", said Bias.

The reform of legislation also deals with how preference should be granted in awarding contracts to provide goods and services to mining operations, environmental protection and management, and the validity of the different types of mining titles. Bias explained that there was a problem of titles being awarded without any activity subsequently taking place. She declared that concessions should be revoked where there was no activity and their holders should not receive any further licences. Bias stated that Mozambique has one of the largest coal reserves in the world, particularly in relation to coking coal. She pointed out that there has been a considerable increase in the level of geological knowledge about Mozambique, particularly in relation to coal reserves in Tete and Niassa provinces. Coal mining companies are currently busy in Tete province preparing to produce tens of millions of tonnes of coal for export beginning in 2011. However, another huge coal reserve is thought to exist in the Maniamba basin in Lago district, in the northern province of Niassa, according to the National Director of Mines, Eduardo Alexandre. (AIM)

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