Mozambique tightens its grip on the mining sector

Written by Ziad Abdel Fattah:

The President of Mozambique signed Daniel Chapo A new law requires the state to own 15% of all local mining and mineral processing projects, tightening control over its resources as demand for battery production materials increases.

Mozambique is the world's third largest producer of graphite, a key material used in electric vehicle batteries and energy storage.

The mining law, passed by parliament in May, aims to strengthen “Mozambique’s management of strategic resources in defense of the national interest,” according to a government notice dated June 3.

Free participation for the country with a minimum of 15%

”The state, through the National Mining Company (ENM), must have a minimum free and non-dilutive 15% participation in all mining projects, at any stage of the value chain,” reads part of the new law seen by Reuters on Thursday.

It was not immediately clear whether the new rules would apply to existing mines, which are mostly covered by long-term agreements.

This move places Mozambique among a growing number of African countries, including Zimbabwe, the continent's largest lithium producer, and the Democratic Republic of Congo, the world's leading cobalt producer and a major global copper supplier, that are tightening controls on raw material exports to achieve greater economic benefit from their resources.

Mozambique possesses one of the world's largest graphite deposits, held by Syrah Resources (SYR.AX). Oil extraction operations are conducted in Palama, in the north of the country. According to the U.S. Geological Survey, China and Madagascar are the two largest oil-producing nations.
The world's largest sapphire mine, Montepuez, is owned by Gemfields (GEMGE.L). [Opens new tab] Also located in northern Mozambique, the country has significant coal assets formerly owned by Rio Tinto (RIO.L). [Opens new tab] and the Brazilian valley.
The new regulations prohibit the export of unprocessed or semi-processed metal products, unless they are covered by a specific ministerial authorization, based on approved plans for eventual domestic processing.