Mozambique: Govt greenlights sale of Mitsui stake in Moatize mine

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Mozambique: Govt greenlights sale of Mitsui stake in Moatize mine

7:28 CAT | 22 Jun 2021

File photo: Vale Mozambique

The Mozambican government has authorized the sale of Japanese Mitsui’s stake in the Moatize coal mine to Brazil’s Vale, a process that will culminate in the Brazilian’s “divestment” in coal exploration in Tete, according to an official statement.

“The transaction follows a request made by Mitsui to sell its stake [15%] in the shareholder structure of the Moatize mine, with Vale now holding 100% of the mining project,” a note from the Ministry of Mineral Resources and Energy reads.

The transaction aims to facilitate the “divestment” of the Brazilian company in coal exploration in Tete, announced by the company in January, a process that is being monitored by the Mozambican government.

“Vale’s restructuring process should safeguard the jobs and rights of the communities where the company operates, in addition to ensuring continued compliance with legal obligations and contracts for goods and services,” the statement from the Ministry of Resources Minerals and Energy stresses, adding that the government will oversee the selection of the next investor.

Coal is one of Mozambique’s main export products, and Vale employs around 8,000 people, of whom close to 3,000 are direct employees and the remainder subcontracted.

Vale justifies its departure with the goal of being carbon neutral by 2050 and reducing some of its main sources of carbon pollution by 2030.

The transaction with Japan’s Mitsui was made for the symbolic price of one US dollar, but all associated expenses and costs pass on to Vale – including an outstanding balance of US$2.5 billion.

Currently, the Brazilian mining company has installed capacity of 12 million tons of coal per year in Mozambique, but in 2018 produced only 11.5 million tons, and in 2019, only eight million.

The 2020 figure should have been even lower, due to the drop in demand for coal caused by the slowdown in the global economy in the face of the Covid-19 pandemic.

Source: Lusa