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  5. > Mozambique Mining Report Q2 2016

Mozambique Mining Report Q2 2016

  • March 2016
  • -
  • Business Monitor International
  • -
  • 47 pages

Includes 3 FREE quarterly updates

BMI View: Mozambique's mining revenue will remain heavily dependent on the country's coal sector,leaving the sector exposed to continued global coal price weakness. Despite this, coal production growthwill continue to exceed gold output growth. Furthermore, both sectors will continue to attract interest fromoverseas investors.

Latest Developments & Structural Trends

- Mozambique's coal production growth will continue to be hampered by weak global coal prices, highdomestic start-up costs and inadequate infrastructure. As such, we have revised our coal productionforecast on the back of persistent challenges facing the country's coal sector. We forecast the country'scoal production to grow from 8.0mnt in 2016 to 9.5mnt by 2020, representing an average growth of 4.2%y-o-y over 2016-2020.

- Despite this, growth will be supported by increasing investment coming into the market, which willsupport long-term production growth. For instance, the Nacala-a-Velha coal terminal, in the country'sNampula province, opened in mid-July 2015, receiving its first transport of coal. This port developmentwill provide an alternative route for the transportation of coal from Tete, and Vale has been particularlyforthcoming with investment. The country's long-term potential as a coal exporter will have to beconsidered against increasing political risk and government intervention in the mining sector. In Q114,Mozambique's government announced its intention to increase taxation on the mining sector and toensure greater mineral wealth is allocated locally. Although we expect the country to remain amenable toforeign investment and to maintain a broadly attractive business environment, this policy move in themining sector will be a cause for concern amongst investors.

- We forecast Mozambique's gold output to total 0.01mn ounces (moz) by 2020. This represents an averageannual growth of 1.1% during 2016-2020. The lack of formal organisation of gold mining activity willensure the industry remains in the shadow of the country's coal mining sector over the next few years.According to 2014 estimates, the combined worth of Mozambique's gold production in 2014 was justunder USD8mn, while the country's coal output was worth an estimated USD428mn.

Table Of Contents

Mozambique Mining Report Q2 2016
BMI Industry View 7
Table: Mozambique Mining Industry Value 7
Latest Developments and Structural Trends 7
SWOT 8
Industry Forecast 10
Coal: Investment To Boost Growth 10
Latest Developments 10
Table: Mozambique - Coal Production Forecasts 10
Table: Mozambique - New Coal Projects 11
Structural Trends 11
India and Japan To Ramp Up Investment 12
Price Drop Hits Profitability Though Not Output 14
Infrastructure Remains Key Challenge 15
Gold: Growth To Lack Behind Coal Sector 16
Latest Developments 16
Table: Mozambique - Gold Production Forecast 17
Table: Mozambique - Gold Projects 17
Structural Trends 17
Exploration Points To Potential Long-Term Expansion 17
Industry Risk Reward Ratings 19
Mozambique - Mining Risk/Reward Index 19
Rewards 19
Industry Rewards 19
Country Rewards 19
Risks 19
Industry Risks 19
Country Risks 20
Africa: Major Risks Remain 20
Key Takeaways 20
Latest Revisions 21
Table: Africa - Mining Risk/Reward Index 23
Regulatory Development 24
Recent Developments 24
Trade and Investment Risk Analysis 24
Commodities Forecast 28
Commodities Outlook 28
Table: BMI Commodities Price Forecasts 28
Competitive Landscape 29
Table: Select Companies - Comparative Metrics 30
Company Profile 31
Vale - Q2 2016 31
Company Overview 33
Company Strategy 33
Latest Results 35
Table: Vale - Key Financial Data 36
Company Details 36
Regional Overview 37
Table: SSA - Government Involvement In Mining Sector 42
Methodology 44
Industry Forecast Methodology 44
Sources 45
Risk/Reward Index Methodology 46
Table: Weighting Of Indicators 47

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