Mozambique: NGO propose changing Montepuez Ruby Mining operating rules

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Mozambique: NGO propose changing Montepuez Ruby Mining operating rules

2:17 CAT | 02 May 2018

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Mozambique’s Public Integrity Centre (CIP) on Monday proposed changing the terms of the Montepuez Ruby Mining company’s operating license so as to retain more of the enterprise’s profits.

“To ensure the project makes a greater contribution to the development of the economy, we recommend that the mining concession be converted into a contract,” a CIP statement released on Monday reads.

The CIP says that the tax contribution from the exploitation area in Cabo Delgado is below the production potential, which is 8.4 million carats per year.

The company’s revenues come from auctions and, since 2012, when it started operating in Mozambique, the company has raised US$335 million (277 million Euros), of which 10 percent is destined for royalties.

According to the organisation’s estimates, the Mozambican government should have received US$7.6 million (6.2 million Euros) in 2014, but said it had only that extracts emeralds and rubies in the north for the country US$3.8 million (3.1 million Euros)

“It is noteworthy that a large part of the profits [85 percent] obtained by the exploitation of Montepuez rubies is expatriated to the countries of origin of a significant part of the partners and only 15 percent are probably retained in the country,” the CIP observes.

“There is a need to improve transparency and accountability in project management, especially revenue,” the document reads, adding that taxation in the mining sector requires proper pricing, and production costs to be properly determined.

Montepuez Ruby Mining is owned by Gemfield and Mwiriti, and the area concerned (about 340 square kilometres) is considered one of the world’s largest privately owned concessions, according to Gemfields.

Gemfields, based in Mauritius, owns 75 percent of the consortium, with the Mozambican company Mwiriti holding the remaining 25 percent.

Source: Lusa