New coal giant Mozambique faces rising public anger

On a recent morning in western Mozambique, a group of 500 families in the district of Moatize fed up with Brazilian mining giant Vale do Rio Doce gave up on writing letters to the government and erected blockades instead. They hauled logs across the railroad and piled stones on the highway, halting the flow of Vale's coal.

The families are among several thousand people displaced by mining activities in the region, recently discovered to hold the world's largest untapped reserves of coking coal, which is used in steel manufacturing. Vale, they said, had not honored its promises: their new houses had been poorly built, and the area where they were resettled was isolated and unsuited to agriculture.

The Mozambican government responded with riot police, and Vale's activities resumed within 24 hours, leading an opposition party to accuse the government of "betraying the people." Nevertheless, after months of silence, the protestors finally saw results: Vale promised to resolve their complaints within six months.

Driven by expanding industry in the BRICS countries – a bloc that includes Brazil, Russia, India, China, and South Africa – global coal production is set to jump by more than 50 percent before 2030. This is part of a wider boom in commodities that has driven mining and oil exploration to remote areas where it was previously considered unprofitable, often for lack of infrastructure. As a result, foreign direct investment (FDI) in Africa is expected to nearly double, to $150 billlion annually, by 2015.

Demand for minerals has made Mozambique one of the world’s 10 fastest-growing economies over the last decade, sitting alongside five other African countries on a list published by the Economist last year. Much of the growth has come through South-South partnerships like the coal projects in Moatize: financed by India and China and carried out by Australia and Brazil. 

But the quest for natural resources has brought mega-projects to governments that are often without the wherewithal or political will to manage and oversee them properly, a phenomenon known in its terminal stages as the “natural resources curse.” Within weeks of the protests in Moatize, Vale – Mozambique’s largest foreign investor to-date – was named for a Public Eye award.

The prize, sometimes called the “Nobel Prize of corporate irresponsibility," singles out corporations for destructive records on the environment and human rights, and there is little reason to believe that Mozambique will be the country to improve Vale’s corporate record. Mining investment has gone from $20 million to more than $1 billion annually since 2001, with little investment in the government agencies that oversee it, despite their ballooning workload.

Dept. in charge has 15 people, several broken motorcycles

1 | 2

Next