Mozambique Mining: Mining Law, LNG News and Sector Developments

Mozambique produces a range of minerals, with graphite and heavy mineral sands being the most significant current contributors. The Balama graphite mine operated by Syrah Resources is among the world's largest graphite mines by resource size and produces battery-grade graphite for export. Heavy mineral sands containing ilmenite, zircon, and rutile are mined in the southern province of Inhambane. Coal was a significant contributor to Mozambique's mining sector, with major deposits in the Tete province targeted by Vale and Rio Tinto, though the coal sector has faced sustained economic challenges. Mozambique also has resources of tantalum, gold, iron ore, and gemstones including rubies and emeralds. The offshore gas sector is large, with the Rovuma Basin containing some of the world's most significant recent gas discoveries, though LNG development has been delayed by security issues.

Mozambique is considered highly mineral-endowed relative to its level of development. The country holds the world's largest graphite reserves by some geological estimates, covering vast areas of northern Mozambique. The Rovuma offshore basin contains natural gas reserves comparable to major producing nations, placing Mozambique among the globally significant gas holders. The Tete province contains substantial coal deposits, including coking coal of sufficient quality to attract investment from major mining companies. Heavy mineral sands deposits along the southern coast are among the largest in Africa. Gold, tantalum, and gemstone occurrences are distributed across multiple provinces. The gap between Mozambique's resource endowment and its current production output is primarily explained by infrastructure deficits, governance challenges, and the security environment in the resource-rich northern provinces.

Mozambique is best known internationally for its graphite production, centred on the Balama district of Cabo Delgado province, and for its ambition to become a major LNG exporter from the Rovuma Basin gas fields. Historically, Mozambique was known as a coal exporter from the Tete province, with Vale and Rio Tinto both having operated in the region, though commercial conditions led to significant scaling back. Heavy mineral sands production from southern Mozambique has been consistent and commercially significant. Mozambique also produces some gold and gemstones, including rubies from the Montepuez area, where Gemfields operates one of the world's most significant ruby mines. The country's reputation as a mining jurisdiction is evolving as it navigates the balance between attracting resource investment and managing the social and environmental dimensions of extraction.

Mozambique's mining sector is governed by the Mining Law, which establishes the framework for exploration and mining licences, royalties, environmental requirements, and community obligations. The law has been revised several times, with amendments in 2014 introducing community development obligations and in subsequent years adjusting fiscal terms. Royalty rates vary by commodity: graphite, coal, and heavy minerals each carry different rates, and gold and gemstones are treated separately. The mining regulatory authority, INAMI, administers licences and oversees compliance. Mozambique introduced local content requirements that require mining companies to engage local suppliers and create local employment, similar to frameworks in other African mining jurisdictions. The stability of the legal framework has been an area of investor concern, particularly around how changes to fiscal terms have been applied to existing licences. Discovery Alert covers regulatory developments in Mozambique as part of its mining jurisdiction coverage.

Mozambique's LNG development is centred on the Rovuma Basin offshore, one of the world's largest recent gas discoveries. TotalEnergies leads the Area 1 LNG project, which was declared force majeure in April 2021 following an insurgent attack on the town of Mocimboa da Praia near the project site in Cabo Delgado province. Construction was suspended and expatriate workers evacuated. The project has remained in force majeure pending security improvements. Eni's Coral Sul floating LNG vessel achieved first LNG production in 2022, representing the first commercial LNG production from Mozambique's offshore gas fields. ExxonMobil leads the separate Area 4 LNG project with a potential onshore liquefaction development, also contingent on the security environment. The security situation has been the dominant constraint on Mozambique's LNG development timeline, with international peacekeeping and SADC stabilisation forces having been deployed to the region.