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Lack of skills, social licence to mine a challenge in Mozambique

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By: Chantelle Kotz

7th June 2013

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The success of the mining industry in Mozambique will depend on how well skills and service expertise are transferred to Mozambican nationals, says global resource consulting group SRK Consulting South Africa chairman Roger Dixon. SRK Consulting maintains that there is a lack of skills and technical services available in Mozambique and that most services are being sourced from outside the country. This is as a result of the civil war, which started in 1977 and brought the countrys mining industry to a complete standstill. Since the civil war in Mozambique ended in 1992, mining companies have returned to the country, mainly to explore the vast coal resources. The confirmation of these resources and the growing demand for coal, particularly coking coal, has led to a vibrant, if not frantic, rush to develop coal deposits in the Tete province of Mozambique, says Dixon.
SELLO NZAMA Mining activity in Mozambique is in its early stages and is benefiting from an increased appetite among foreign investors

SRK Consulting senior geologist Sello Nzama says mining activity is in its early stages and is benefiting from an increased appetite among foreign investors. Investment in the country is significant, not only in coal but also in liquefied natural gas, in the north-east part of the country, and in the infrastructure required to sustain these two sectors, says Dixon. He says the country will benefit from improved infrastructure and faster development of the economy, while government revenue will be boosted by the royalties and taxes that are levied on the mining companies.

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Investment in Mozambique is significant, not only in coal but also in liquefied natural gas, in the north-east part of the country, and in the infrastructure required to sustain these two sectors. As a result, the country will benefit from improved infrastructure and faster development of the economy, while government revenue will be boosted by the royalties and taxes that are levied on the mining companies Roger Dixon
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Nzama adds that mining has recently started to contribute towards economic growth in Tete. This is taking place in the form of basic infrastructure and housing and education training facilities, which subsequently led to more employment for locals, while attracting people from other regions to the province. While there is a skills shortage in Mozambique, Nzama suggests that countries, such as Brazil and Portugal, which have more developed mining industries and larger skills sets, can provide expatriate workers to assist the growing mining industry while Mozambique builds the skills of its own workforce. SRK Consulting environmental and social business unit associate partner Briony Liber highlights some encouraging examples of mining companies dealing with the skills shortage, such as mining companies taking Mozambican nationals to Brazil to undergo training. Meanwhile, foreign companies have also begun setting up laboratory facilities in the region, resulting in increased employment and skills transfer, which benefits the growing mining sector, says Dixon. Further Challenges Mozambiques mining sector faces the challenge of insufficient infrastructure to facilitate the export of coal to major global markets. The rail and port facilities required to reap the improved benefits of Mozambiques coal resources are significant, as the current rail infrastructure is still inadequate to meet the needs of the coal miners, says Dixon. However, several rail projects are either being developed or are in the planning stage, but the challenge lies in whether the high cost of rail infrastructure will allow only big players to enter Mozambiques coal sector, he says.

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Another important challenge for mining companies will be to secure the social licence to mine, says Liber.
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Social Licence to Mine A social licence refers to the acceptance of mining developments, not only by government authorities, but also by the broader community and the nongovernmental organisations that represent them. The social licence centres on building strong relationships and partnerships built on trust, credibility, timely responses to community issues, transparency, the disclosure of information and shared value, says Liber.

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The social licence to mine, therefore, takes time to establish and effort to maintain, but is increasingly being recognised in the mining industry as a legitimate and necessary investment of business resources. We still see many companies investing a lot of effort in securing their social licence during the permitting phase of a project, but they often do not appreciate the importance of maintaining that social licence during operations. This may cause mining companies to lose the communitys recognition of their social licence to mine. This continues to happen in many parts of the world and I believe that it will not be any different in Mozambique, says Liber. Dixon suggests that the social licence to mine will soon be tested in Mozambique, as it is in other parts of the world, as the countrys history is similar to that of others, where development has been characterised by periods of extreme poverty linked to internal wars in the pursuit of power. If the new-found wealth from Mozambiques mining industry does not filter down to the poor, it is likely that unrest will occur, says Liber. Further, Dixon notes that there have been isolated incidents of community protests in some areas of Mozambique about living standards after relocation owing to mining activities. Outlook SRK Consulting regards the coal sector in Mozambique as a possible key growth area and market for its company, as it has a growing coal business unit that it aims to expand. Mozambique is an obvious growth area for us, where we can use our full spectrum of skills, ranging from early exploration to mine closure. We believe that our experience in environmental and social aspects of projects will help us to establish a presence in Mozambique, says Dixon. SRK Consulting is currently involved in rail projects and in mineral resource and reserve estimations in Mozambique.

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TOPICS IN THIS ARTICLE Com pany Education SRK Consulting South Africa Country Brazil Mozambique Portugal Industry Term Basic Infrastructure Developed Mining Industries Insufficient Infrastructure Liquefied Natural Gas Mining Rail Infrastructure Resource Consulting Region South Africa Person Briony Liber Roger Dixon Sello Nzama

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