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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Mozambique Goes Green, Blindsides International Mining Interests

It’s hard not to be downcast when reading much of the news from Africa, ravaged as it is by wars, hunger, poverty, famine and rapacious Western companies intent on exploiting the governments’ desperation for foreign revenue.

But, just occasionally, an uplifting story breaks through the gloom and pessimism.

One such tale comes from Mozambique, where the country’s Ministry for Coordination of Environmental Affairs (MICOA), has canceled 146 investment projects in various economic activities because they failed to meet the requirements of the country’s environmental laws.

The canceled proposals include the activities of some major Western firms, including Australian company Riversdale Mining Ltd, which was acquired in April 2010 by British-Australian Rio Tinto Group. In a press release celebrating its corporate takeover triumph Rio Tinto noted, “The successful acquisition provides Rio Tinto with coal mining and exploration projects in Mozambique including the Benga project, a 65:35 joint venture with Tata Steel Limited. A mining concession has been granted for this project, with initial coal for export scheduled before the end of the year. Also the Zambeze coal project, 100 per cent owned by Riversdale. An exploration license has been granted for this project. These projects are located adjoining in the Tete and Moatize provinces of Mozambique. Riversdale also has several prospective exploration tenements in the region.”

It might be noted here that Rio Tinto Group is a mining conglomerate whose 2010 revenues exceeded $60 billion. To put its business accomplishments in perspective, in March 2011 the International Monetary Fund estimated that nation’s GDP for 2011 would be $10.5 billion, with a poverty rate of 79.8 percent. So, what caused authorities in Maputo to cancel a project proposed by a company whose annual revenues exceed Mozambique’s GDP by 600 percent?

Riversdale Mining Ltd’s proposal to transport coal to the sea by barging it down the Zambezi River. Covering its bets, in 2011 Riversdale Mining Ltd submitted an Environmental Impact Report on coal barges to Mozambique’s government, which it had commissioned from the specialist Mozambican company Impacto and which, perhaps not surprisingly, concluded that transporting coal down the river would not cause “significant” environment damage.

Nevertheless, the government decided not to approve the project despite the fact that the coal even had a ready-made market next door, South Africa.

MICOA Permanent Secretary Samuel Xirinda told journalists that the 146 projects canceled because of environmental legislation strictures constituted a third of the 437 projects audited by the government in 2011, adding that that the national legislation provides for heavy fines and among other sanctions can ban development in cases where projects are implemented without the government’s prior approval of an environmental impact study which companies are required to provide. 

But Xirinda acknowledged that the government’s mechanisms for oversight remain imperfect, stating, "There are also weaknesses in the sector’s institutions in monitoring and dealing with various environmental matters, which is why there is an all-out effort intended to include the government’s technical agencies in the process of handling of investment considerations, including environmental action, tourism, fisheries and mineral resources." The government was essentially unanimous on the decision. Transport Minister Paulo Zucula claimed that the impact of the proposed Rio Tinto project would be "very negative… As proposed, it is not doable before adding that since the Zambezi suffers regular floods, plans to dredge the river and widen the banks to allow barges passing would have unknown impacts as well as affecting the river’s fish. Adding the only sunny note to his observations Zucula stated that Rio Tinto could rework and resubmit its proposal but emphasized that Mozambique would much prefer mining companies to move their coal by rail, concluding, "If you compare the two in terms of the environment, the difference is huge." 

No doubt Rio Tinto feels blindsided by Maputo’s opposition, and worse may yet be coming, as Xirinda told journalists that Norwegian specialists are arriving to train Mozambican technicians how to evaluate projects related to hydrocarbon exploration.

African governments refusing multinationals’ efforts to develop their energy assets in favor of environmental concerns? Why, it’s enough to make board members consider fomenting a coup – an all too sorry and common a practice in Africa’s post colonial history. 

In the meantime, the fish of the Zambesi, the largest river basin in Southern Africa, which flows through not only Mozambique but Angola, Botswana, Malawi, Namibia, Tanzania, Zambia, and Zimbabwe as well, along with the populations lining its banks, are no doubt grateful for Maputo’s forbearance and foresight even it momentarily delays the Mozambican Treasury’s “bottom line.”

By. John C.K. Daly of Oilprice.com

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  • Altie Steenkamp on March 07 2012 said:
    A thousand hoorays for the Mozambican Government! One sees, feels and notes that this is a GOVERNMENT that think and act on good faith for its land and people! The Zambeze is on of the biggest assets we have in Moz. Well done!!!
    Alti Steenkamp
  • Steve Mallyon on March 07 2012 said:

    reading your article about the Zambezi barging study I think a key point has been missed by both the public and the Mozambique government. All rail transport in Mozambique is diesel based and currently very inefficient. As a former MD of Riversdale Mining the real attraction of barging is that it has the lowest carbon footprint of any transport solution. In addition 2,000 seperate community consultations along the Zambezi confirmed widespread community support for barging as a way of developing a transport capability to eventually reduce the 79.8% poverty rate quoted in your report. In terms of environmental impact on the river the only study completed was that by Riversdale. Nonetheless it was clear that the Zambezi was no a pristine waterway and fish and large mammal populations had been reduced by the civil war and later by over-population along the key grazing areas for hippo, water buffalo and antelope.

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