Good afternoon! Ahead of today’s Zitamar Daily Briefing, due out shortly, here’s a look back at last week in Mozambique — for paying and free subscribers alike.
The week saw President Daniel Chapo travel to Brussels for important meetings with politicians and business leaders. He met with the heads of both TotalEnergies and ExxonMobil, and senior European politicians. He is working to keep the LNG projects in the far north-east of the country on track, and that includes keeping the Rwandan military engaged in containing the insurgency in Cabo Delgado province. Reports that the European Union will stop providing its subsidy for that deployment has led Rwanda to threaten to pull out, which could have disastrous consequences for the gas projects, among other things. But our assessment is that the threat is largely empty.
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Total and Exxon apparently provided assurances that their projects will definitely proceed. But Chapo is not pulling out quite all the stops to ensure that; he also said this week that the TotalEnergies-led consortium will have to wait until the end of its 30-year concession to see if it will be granted the extension it demanded in return for lifting force majeure and restarting the project. Its other demand, that a further $4.5bn be ruled tax deductible, is still being haggled over.
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Chapo's government is playing hardball with other foreign investors, too. Kenmare, the operator of a heavy sand mine on the Nampulal coast, wants its tax deal to be renewed, and believes it has the law on its side; the government says the tax breaks it was given decades ago are no longer necessary since the project is a profitable concern. Kenmare says it is willing to go to international arbitration over the issue.
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And South32, the majority owner of the Mozal aluminium smelter near Maputo, has been told its move to shut down the plant was illegal, since it didn't have formal agreement from all the shareholders - which include the Mozambican government. The Attorney General has ordered South32 to reopen the plant - something which would take 12 months to achieve, now that it's been put on care and maintenance. Mozal is due for an AGM this week, where the issue of shareholder alignment should be resolved.
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Other foreign investors are receiving kinder treatment. The Chinese-owned tile factory looks set to be the main — if not the only — beneficiary of tariffs that the government is proposing to put on tiles. Similar protection for food production, such as chickens, could have wider benefits for producers; but the government will need to be careful of the negative impact it would have on consumers.
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In other news, a major new coal mining project was launched in Tete province, and a new media law, years in the making, was passed in parliament. And in today’s Daily, paying subscribers will read about UN warnings over the Afungi LNG projects, Russia’s shadow fleet sailing under the Mozambican flag, and the suspension of an international broadcaster in Mozambique.
It promises to be an eventful week ahead. Sign up to keep up — and support independent journalism on Mozambique.
