|31 Jan 2002
Enron bankruptcy likely to kill steel project
The Mozambican government has admitted that, with the bankruptcy of the
US energy company Enron, there is a serious risk that the projected Maputo Iron
and Steel Project (MISP) will not be built.
MISP was to have been a factory on the outskirts of Maputo producing two
million tonnes of steel slabs a year. It would have used iron ore (magnetite)
from South Africa, and natural gas from the southern Mozambican province of
Inhambane. For Mozambique the great advantage of MISP was that it provided a
market inside Mozambique for the vast quantities of natural gas in the
Inhambane fields of Pande and Temane. Without MISP, most of the gas will simply
be exported to South Africa, for use in the chemical plants of the South
African company SASOL.
MISP was Enron's project, and Enron was the only confirmed shareholder.
Enron intended to hold 50 per cent of the equity in MISP, and recruit other
companies to subscribe the other 50 per cent. After Enron went bankrupt in
December, no other company has expressed an interest in MISP.
A spokesman for the Ministry of Mineral Resources and Energy told AIM
"Enron's bankruptcy compromises the government's hopes that another large scale
industry would be set up in the country, which would, among other things, have
made possible the creation of more jobs".
No doubt Enron is in breach of its agreements with the Mozambican
government, but it is hard to see what compensation the government can expect,
now that Enron shares are virtually worthless, its debts are far in excess of
its assets, and the company's unorthodox, and possibly criminal behaviour, is
under US congressional scrutiny. (AIM)