Mozambique: REDD+ project to protect Inhambane forests

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Mozambique: REDD+ project to protect Inhambane forests

11:12 CAT | 09 Mar 2022

Image: Carbon Neutral Royalty (CNW Group/Carbon Neutral Royalty Ltd.)

The Canadian based company Carbon Neutral Royalty has entered into an agreement with the Mozambican company Mozban under which 30,960 hectares of forest and sustainable agriculture in the southern province of Inhambane will be protected under the international REDD+ framework.

REDD+ was created by the United Nations Framework Convention on Climate Change Conference of the Parties (COP) to reduce carbon emissions from deforestation and forest degradation. It also supports the sustainable management of forests and the conservation and enhancement of forest carbon stocks in developing countries.

According to a statement released on Monday by Carbon Neutral Royalty, the company will provide up to 335,000 US dollars to fund the development of the project in Inhambane. The project will last 49 years, although Mozban has the right to extend the project for successive 10-year periods.

Carbon Neutral Royalty points out that a third party pre-feasibility study estimates that the project will generate an average of 25,000 to 35,000 Verified Carbon Units (VCU) per year over a 20 year period. Each VCU represents a reduction of one tonne of carbon dioxide and can be bought and sold on the international market as a “carbon credit”.

Under the agreement, Carbon Neutral Royalty will be entitled to receive all the carbon credits that are issued until a compounded annual return on investment of ten per cent is received. After that, it will be entitled to receive half of the credits produced over the life of the project.

Commenting on the agreement, the chair of Carbon Neutral Royalty, Brett Heath, notes that “Mozambique has 40 million hectares of forests and a high rate of deforestation”.

Currently, the land leased to Mozban is composed of several parcels used for cattle ranching and features degraded dry forest and savannah. The company intends that this will be transformed into a conservation & Sustainable Agricultural Land Management (SALM) project.

The next step in the project will be to carry out further feasibility studies and work on the project design document. The project is expected to begin in 2024.

Many international companies purchase Voluntary Carbon Units to offset the damage that they are doing to the planet. These units are bought and sold on the market like any other commodity and their price depends on the interaction between supply and demand, along with a large element of market speculation. This year there has been a huge variation in the price of VCUs, ranging from 9.44 dollars per unit at the end of February to 5.45 dollars on 4 March. According to a report produced in October by the consulting firm McKinsey, the global value of the voluntary carbon markets is 300 million dollars. However, it warns that these are “not yet investable as an asset class”.

By John Hughes

Carbon Neutral Royalty acquires carbon credit stream on the Mozban project

London, March 7, 2022 /CNW/ – Carbon Neutral Royalty Ltd. (“CNR ” or the ” Company “) (Private) is pleased to announce it has entered into an Investment Agreement Partnership with Mozban Limitada (“Mozban”) for the development of a 30,960 hectare REDD+ avoided deforestation & sustainable agriculture carbon offset project in Inhambane, Mozambique. Mozban holds the project area under a 49-year lease which can be further extended.

Investment highlights:

CNR will fund the development of the project for up to an estimated $335,000.

Project length of 49 years with the right to extend the project for successive 10-year periods.

Third party pre-feasibility study completed, estimating an average of 25,000-35,000 Verified Carbon Units (“VCU”) per year over a 20-year period under the Verra VCS Standard with the potential for an average of 75,000 VCUs/annum.

The project feasibility remains subject to further assessments and a project design document.

CNR will be entitled to receive 100% of the issued credits until a compounded annual return on investment of 10% is received. Thereafter, CNR will be entitled to receive 50% of all credits produced over the life of the project.

Estimated start date in 2024

CNR will be entitled to receive 15% of all issued credits on future projects developed by Mozban in Mozambique for no additional payment.

Brett Heath Chairman of Carbon Neutral Royalty commented “Mozambique has 40 million hectares of forests and a high rate of deforestation. CNR plans to develop a conservation and Sustainable Agricultural Land Management (SALM) project in the heart of northern Mozambique, using a repeatable framework for potential future expansion”

The REDD+ Framework developed by the UN convention on Climate Change will be used to define the project. The project is anticipated to be certified through the Verra Verified Carbon Standards.

About Mozban

Mozban holds a long-term lease on several parcels in Southern Mozambique Inhambane province covering a total area of 30,960 hectares. This area is used for extensive cattle ranching on semi-natural, degraded dry forest with grasslands (savannah), which could become a conservation & Sustainable Agricultural Land Management (SALM) project. The project owner has a management team on the ground and other land holdings in Southern Mozambique. This experience and other land holdings provide the potential opportunity for a diversified investment in carbon, agroforestry, and other project activities beyond cattle grazing. The project has the potential to be a grouped project and expand in future instances to further grazing areas.

About Carbon Neutral Royalty

Carbon Neutral Royalty was founded in July 2021 by an experienced team and is assembling a high-quality, long-life, portfolio of carbon credit streams and royalty projects across the world. Our goal is to increase shareholder value by adding accretive acquisitions to our diversified portfolio of assets, focusing on the most experienced developers.

For further information, please visit our website at www.carbonneutralltd.com.

On behalf of Carbon Neutral Royalty Ltd.

(signed) “Brett Heath”

Source: AIM / Carbon Neutral Royalty (CNW Group/Carbon Neutral Royalty Ltd.)