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KPMG Global Mining Conference: Opportunities in Mozambique

Africa’s economies have been expanding robustly as new discoveries of coal, oil and gas look set to create substantial business opportunities and transform the continent’s economies.

The continent not only is a major producer of diamonds, nickel and uranium, but also holds 40% of the world’s gold, 60% of cobalt and 90% of its platinum reserves. Africa’s growth, however, results from more than a resource boom, having been supported (amongst other factors) by external trends such as its’ increased access to international capital and ability to forge economic partnerships with foreign investors.

Long-term growth prospects are strong, as external trends will bring internal changes in the continent’s economies and societies.

Mozambique: Mining

This year’s host country of the Global Mining Conference, Mozambique, lies in the South-East of the continent and has been described as being the sixth-fastest growing economy in Sub-Saharan Africa in 2012.

The country’s real GDP growth accelerated slightly to 7.4% in 2012 from 7.3% in 2011, with a fairly balanced contribution to GDP across economic sectors. Coal and natural gas reserves are part of the country’s greatest resources as mining output soared by 41% in 2013. The remote Tete province boasts possibly the last big coking mine in the world and local analysts estimate that while gas could bring the country a revenue of US$200bn to US$400bn over 40 years, coal export volumes will grow from 4m tonnes in 2013 to 19.5m tonnes in 2017.

Additional opportunities

In addition to the mining and gas potential of Mozambique, the coastline of the country stretches over 2,500 KM, and possesses an abundance of marine resources that are not fully exploited. Water resources are also plentiful, as a number of rivers, including the Limpopo, Zambezi, Save, Lurio and Rovuma pass across the country, leading to a high hydropower potential. Agricultural potential is also high – agriculture accounts for the largest component of Mozambique’s GDP.

The country’s largest source of export revenue comes from aluminium (due to the Mozal smelter). Other exports include prawns, cashews, cotton, timber and citrus fruits. Hence, outside of mining and gas, agriculture, fishing, energy and tourism constitute important pillars for the country’s development. Investment opportunities exist in these sectors, and for this reason total exports are expected to rise from an estimated US$3.8bn in 2012 to US$8.5bn in 2017.

Read more on the KPMG Global Mining Conference here

David Okwara

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