Iron and steel contract approved – AIM report

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Iron and steel contract approved – AIM report

7:16 CAT | 16 Nov 2017

The Mozambican government on Tuesday approved the contract authorising Capitol Resources, a subsidiary of the Australian company Baobab, to mine iron ore in Chiuta district, in the western province of Tete.

Speaking to reporters after the weekly meeting of the Council of Ministers (Cabinet), the government spokesperson, Deputy Education Minister Armindo Ngunga said the contract allows Capitol Resources to produce iron and steel. It also envisages the construction of a thermal power station. The contract is for 25 years and is renewable.

On its website, Baobab boasts that its Tete steel factory will be “the cornerstone of Mozambique’s steel industry for the next 100 years”.

It is developing the Tete Iron and Steel Project in partnership with the International Finance Corporation (IFC), which holds a 13 per cent stake in the project. The IFC is the private sector lending arm of the World Bank group, and claims to be the largest development organisation exclusively focused on the private sector in developing countries.

The steel plant will be located about 50 kilometres north of Tete city. Baobab says it will be “ideally positioned to service the burgeoning Mozambican demand for steel as well as the neighbouring landlocked markets of Zambia, Malawi and Zimbabwe, which are almost entirely dependent on steel imports”.

The Council of Ministers also approved two loans contracted by the government with the Italian bank Cassa Depositi e Prestiti in September.

One loan is for 60 million euros (71 million US dollars) and will finance the Maputo City storm water drainage system. The second loan, for 35 million euros, will finance the Technical and Professional Education reform programme.

The two loans are interest free and should be repaid over 25 years.

Source: AIM