About Mozambique

Mozambique is one of the fastest growing (GDP 8% pa over 10 years) and most secure African economies driven by large resource developments such as BHP’s Mozal Aluminium Smelter and CVRD’s Moatize coal developments. Mozambique has strong World Bank and IMF support, has been a democracy since 1992 and supports 100% foreign ownership of resource projects.

Mozambique is one of three key locations of historical tantalum production in Africa, the others being Rwanda and the Democratic Republic of Congo. Africa is the second most important source of tantalum after Western Australia. The Alto Ligonha Pegmatite Belt, where Pacific Wildcat’s project is located, is recognised as one of the premier mineralised pegmatite fields in the world.

Mozambique was a Portuguese colony until independence in 1975. A severe drought, large-scale emigration, economic dependence on South Africa and a prolonged civil war hindered the country's development until the mid 1990's. The fighting ended in 1992 after the United Nations negotiated a peace agreement, the Republic of Mozambique then embarked on a new stable and democratic political era, with sound economic policies that have encouraged foreign investment. Mozambique has seen very strong economic growth since the end of the civil war largely due to post-conflict reconstruction.

Mozambique is divided into two topographical regions by the Zambezi River, which flows through the north-central and most fertile part of the country. To the north of the Zambezi, the narrow coastal lowlands become hilly inland with a low plateau and further to the west are rugged highlands, to the south of the Zambezi, the lowlands are broader with plateaus and mountains located in the deep south. The country has a tropical to subtropical climate with a dry season from April to September and a wet season from October to March. Climatic conditions, however, vary depending on altitude. Rainfall is heavy along the coast and decreases in the north and south.

Mozambique’s geographical position makes it an attractive location to set up mineral processing plants with good proximity to African, European and Asian markets and it has a strategically important coastline with the capital Maputo having a major port as well as the major towns of Beira & Nacala, with many other minor ports located along the 2,500km coastline. The government of Mozambique welcomes investment in the country by foreign mining companies and seeks to encourage significant growth in the mining sector now and in the future. The country is well endowed with mineral resources and along with Tantalum other natural resources that can be found are coal, mineral sands, graphite, titanium, gold, iron, gemstones, natural gas and hydropower.

Mozambique’s Political History Since Independence from Portugal.
At independence in 1975, Mozambique was one of the world's poorest countries. In 1987, the government embarked on a series of macroeconomic reforms designed to stabilize the economy. These steps, combined with donor assistance and with political stability since the multi-party elections in 1994, have led to dramatic improvements in the country's growth rate. Inflation was reduced to single digits during the late 1990s, and although it returned to double digits in 2000-06, in 2007 inflation had slowed to 8%, while GDP growth reached 7.5%.

Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities. In spite of these gains, Mozambique remains dependent upon foreign assistance for much of its annual budget, and the majority of the population remains below the poverty line. Subsistence agriculture continues to employ the vast majority of the country's work force.

A substantial trade imbalance persists although the opening of the Mozal aluminium smelter, the country's largest foreign investment project to date, has increased export earnings.

At the end of 2007, and after years of negotiations, the government took over Portugal's majority share of the Cahora Bassa Hydroelectricity (HCB) Company, a dam that was not transferred to Mozambique at independence because of the ensuing civil war and unpaid debts. More power is needed for additional investment projects in titanium extraction and processing and garment manufacturing that could further close the import/export gap.

Mozambique's once substantial foreign debt has been reduced through forgiveness and rescheduling under the IMF's Heavily Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and is now at a manageable level.

In July 2007 the Millennium Challenge Corporation (MCC) signed a Compact with Mozambique; the Compact entered into force in September 2008 and will continue for five years. Compact projects will focus on improving sanitation, roads, agriculture, and the business regulation environment in an effort to spur economic growth in the four northern provinces of the country.