New coal giant Mozambique faces rising public anger

In Tete Province, which includes Moatize, the same team that once administered a handful of prospecting licenses, is now responsible for nearly 250. Lagos Correia, chief engineer in the Department of Mineral Resources and Energy said flatly that “the reinforcement that the sector has gotten is not at the level currently required.”

His department, which oversees “geology, mapping, inspection, laboratory analysis, seismology, and small-scale artisanal mining,” has 15 people and several broken motorcycles. They share a pickup truck with other offices in the building.

It is not yet clear where revenue from the mining sector is used. Mozambican civil society groups like the Center for Public Integrity (CIP) have alleged graft and significant conflicts of interests of the part of government officials.

Last year, Mozambique’s application to join the Extractive Industries Transparency Initiative, a global ethical framework for natural resource extraction, was rejected for insufficient information about the flow of mining revenue. (Unsurprisingly, none of the other countries on the Economist’s top-10 are compliant, either).

Echoes across the continent

Mega-projects in Mozambique have been met with a chorus of criticism that echoes protests taking place across the continent: In the past year, citizens in South Africa, Guinea, Uganda, and Nigeria have taken to the streets to call for more equitable use of their countries’ mineral wealth.

A book-length report on mining in Tete published by the CIP last year argued that the net effects on the local population have been harmful, not only because of forced resettlement, but because of skyrocketing costs of living near mega-projects. Despite 7 percent annual growth over the past 10 years, the expansion of Mozambique’s economy has done little to address the country’s underdevelopment: Half of Mozambican children suffer from chronic malnutrition, and crop yields have remained stagnant in a country where 80 percent of the population are subsistence farmers.

Mozambique’s most prominent economist, Carlos Nunes Castel Branco, has shown that only 3 percent to 5 percent of profits from FDI are reinvested within the country, largely due to a string of recent tax breaks that leave many foreign companies without a tax bill for their first 15 years of operation in the country.

Even the IMF has called for Mozambique to reconsider the generous tax incentives it offers foreign capital. “These companies were drawn here by the coal, not the tax incentives,” Mr. Castel-Branco points out. Yet the government has consistently resisted calls to renegotiate the contracts it signed with multinationals investing in the country.

Isabel Pedro, a farmer who moved with her husband and six children to one of Vale’s “improved homes” in a resettlement tract last year, initially opposed moving outright.

“But the State is the State; white people are white people,” she said, laughing. For Ms. Pedro, “white people,” often used as shorthand for foreigners in Mozambique, are one and the same with the State – the same State that mediated Pedro’s resettlement. Until the government can show it has the population’s interests at heart, it may be clearing Vale’s railroads for years to come.

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