Mozambique Mining Report Q3 2016

Date: June 15, 2016
Pages: 47
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)

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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 growth will continue to exceed gold output growth. Furthermore, both sectors will continue to attract interest from overseas investors.

Latest Developments & Structural Trends
  • The suspension of donor aid to Mozambique in the wake of the hidden debt scandal has prompted us to downgrade our construction growth forecasts for 2016, to 4.0% in real terms down from the original projection of 4.8% (see 'Government Debt Scandal Weighs On Infrastructure Outlook', May 9). The government will struggle to fund the road and social infrastructure projects earmarked in its budget, as the weak commodities outlook alongside high recurrent expenditure weighs on the fiscal balance.
  • We have revised our coal production forecast on the back of persistent challenges facing the country's coal sector. We forecast the country's coal production to grow from 8.0mnt in 2016 to 9.5mnt by 2020, representing an average growth of 4.2% y-o-y during 2016-2020.
  • Mozambique's coal production growth will continue to be hampered by weak global coal prices, high domestic start-up costs and inadequate infrastructure. Despite this, growth will be supported by increasing investment coming into the market, which will support long-term production growth. A key project underway is the USD300mn modernisation project at the port of Nacala in the Nampula province, bolstered by funding from the Japanese government and on track for completion by 2020. The development is supported by the 912km railway linking the port to the country's vast reserves in the Tete province, completed in 2014; and the Nacala-a-Velha coal terminal which opened in 2015. These projects form part of the Nacala Logistics Corridor, commissioned by Vale in 2012 to link the reserves to the east coast of Mozambique. In 2015 the company received an USD300mn loan from the African Development Bank to increase export capacity at the port of Beira.
BMI Industry View
  Table: Mozambique Mining Industry Value
Latest Developments & Structural Trends
Industry Forecast
Coal: Investment To Boost Growth
Latest Developments
  Table: Mozambique - Coal Production Forecasts
  Table: Mozambique - New Coal Projects
Structural Trends
India & Japan To Ramp Up Investment
Price Drop Hits Profitability Though Not Output
Infrastructure Remains Key Challenge
Gold: Growth To Lack Behind Coal Sector
Latest Developments
  Table: Mozambique - Gold Production Forecast
  Table: Mozambique - Gold Projects
Structural Trends
Exploration Points To Potential Long-Term Expansion
Industry Risk Reward Ratings
Mozambique - Mining Risk/Reward Index
Industry Rewards
Country Rewards
Industry Risks
Country Risks
Africa - Risk/Reward Index
Key Takeaways
Latest Revisions
  Table: Africa - Mining Risk/Reward Index
Regulatory Development
Recent Developments
Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
  Table: BMI Commodities Price Forecasts
Competitive Landscape
  Table: Select Companies - Comparative Metrics
Company Profile
Vale - Q3 2016
Company Overview
Company Strategy
Latest Results
  Table: Vale - Key Financial Data
Regional Overview
  Table: SSA - Government Involvement In Mining Sector
Industry Forecast Methodology
Risk/Reward Index Methodology
  Table: Weighting Of Indicators
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