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Insurgent violence brings Montepuez ruby mining to a halt

An insurgent attack yesterday has put lucrative ruby mining on pause in Cabo Delgado, and could hit investor confidence in the longer term

In unprecedented insurgent attack on the Indian-owned Gemrock ruby mining concession in the Ancuabe district of Cabo Delgado province has forced it, and the neighbouring Montepuez Ruby Mine, to evacuate all staff. No casualties have yet been reported but the Mozambican military has been deployed to the area and remains on high alert. It is not clear when mining operations will be able to restart.

The attack began after dawn, when about 20 insurgents armed with AK-47s and, according to some local sources, mortars, snuck towards the perimeter of the camp and began firing their weapons, prompting security, operated by GardaWorld, to sound the alarm to evacuate. Armed police stayed on-site but insurgents succeeded in destroying several vehicles, locals said.

Security camera footage seen by Zitamar, timestamped at just after 7am on 20 October, shows four armed men in military uniform and an unidentified fifth man, who appears to be a guard, walking past a burning pickup truck in the ‘workshop area’ of the camp.

A GardaWorld employee said on Thursday afternoon that all Gemrock and GardaWorld personnel had been accounted for and safe. He said just one vehicle has been burnt, and there had been no damage to infrastructure or mining equipment. The Mozambican police and armed forces, he said, had been “fantastic”.

However, multiple reports circulating on messaging apps on Thursday suggested that contact had in fact been lost with several Indian and local employees. It has not yet been confirmed if those missing persons have been recovered. Gemrock did not reply to a request for clarification before this article was published.

This is the first insurgent attack on a ruby mining concession in Mozambique. In July, insurgents beheaded two people at the Australian-owned Grafex graphite mining project in Ancuabe, but it is not clear that the project was deliberately targeted.

The Montepuez Ruby Mine (MRM), less than 15km away, immediately began preparations to evacuate its own staff. In a statement via majority stakeholder Gemfields, MRM announced “mining operations at the site have ceased”. Security personnel and the Mozambique police force were remaining on site, and members of the Mozambican military were on their way, Gemfields said.

Zitamar understands that as of Friday afternoon all operational staff at MRM had been evacuated and 40 military personnel were on site.

Much of the GardaWorld security staff, which also works for MRM, was evacuated to Montepuez. Many were said to be initially reluctant to return to the mine for fear of the insurgents but as it became clear that the situation was less grave than originally presumed they were persuaded to go back.

On Thursday evening, artisanal miners, known as garimpeiros, attempted to take advantage of the confusion and launched an incursion into the MRM concession. However, the arrival of the military following the attack ultimately deterred the miners and the situation is now under control, a local source told Zitamar.

Shares in Gemfields Group Ltd. fell by more than a fifth in Johannesburg following the attack, Bloomberg reported, raising questions as to the damage this incident could do to the commercial viability of the Cabo Delgado mining industry. Marisa Lourenço, a Johannesburg-based security analyst, said there is potential for serious disruption, resulting in cost overruns and diminished production, associated with a major security incident such as this.

Investor confidence is also at risk, said Lourenço. “Investors have likely grown much more wary of operations in northern Mozambique as the insurgency since the attack on Palma town in March 2021,” she explained. “Investors are very sensitive to news cycles, and increased focus on Cabo Delgado will spook them, especially investors that are more risk averse.”

However, the value of the resources being mined in Cabo Delgado is overwhelming. “Graphite, which is being mined in Cabo Delgado, is very important to the global energy transition, particularly electric vehicles in the West,” Lourenço said. “Demand for this resource alongside relatively favourable terms for mining firms… will ensure that firms are prepared to tolerate less-than-ideal conditions for business. This goes for all commodities.”

SEE ALSO: Syrah celebrates $220m US grant, but graphite mine is threatened by Cabo Delgado unrest