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Economy

More coal for all in Mozambique?

Tete, in central Mozambique, was for a long time a forgotten province. Since large coal deposits were discovered, the region has attracted many who hope they can get rich fast. But is there enough coal for everyone?

The city of Tete, capital of the province of the same name, is booming. Local residents say there are now more banks than bakeries, drug stores or greengrocers. That's an exaggeration, but it shows, nonetheless, how Tete has changed.

Tete market Photo: Marta Barroso

The market inTete has grown in recent years

Just a few years ago, there were four banks in Tete, by 2011 there were 15. Brand new buildings have shot up on what were once undeveloped plots of land. There are new restaurants and cafes; clothing and food are on sale almost everywhere. Almost all hotels are fully booked and those which are not are just waiting for employees from the bigger companies to arrive in town. 

Not so long ago it was impossible to buy a cell phone anywhere in Tete province, unless you came across a long distance truck driver who was passing through the region and had some to sell. But now you can buy smart phones at the local market. This draws customers from far away, even from other countries.

Will Tete benefit?        

Olivia and Faith work as a hairdresser and beautician respectively at the market in Tete.

Hairdresser Olivia.
Photo: Marta Barroso

Olivia is optimistic about the future

Just a few years ago, the market consisted of one large hall in which fruit, meat and vegetables were sold. In the meantime, it has grown in size as extensions were added.

29-year-old Olivia came to Mozambique from neighboring Zimbabwe in 2008 to escape from the hyperinflation that was ravaging the country under the rule of President Robert Mugabe. In Tete, she had heard, you could earn a decent wage. Her hopes were fulfilled. She makes between 500 and 1,000 meticais, (15 to 20 euros, $19 - 26), a day which she says is more than enough to live on. Olivia is also convinced that the arrival of foreign firms in Tete will be advantageous for the city. "People will get jobs and things will develop," she said.

Lenard and Ronald have their stands on the same gangway as Olivia and Faith. They also came from Tete from Zimbabwe to improve their standard of living. But they think that the two young women are naïve. "They are not looking ahead," says Ronald. "It's not just a matter of getting enough to eat or buying good clothes. You can only talk in terms of development when the children can go to school, when they get a proper education and training and a decent wage at the end of it." Lenard said that is what development is all about but in Tete "there are shortages everywhere."

Foreign investment in raw materials        

Geologists suspect that the world's biggest coal deposits lie in Tete province along the border with Malawi. The Brazilian mining giant Vale was the first to arrive in 2007. It was followed shortly after by the British-Australian concern Rio Tinto.

A mine in Moatize. Photo: Marta Barroso

The mine in Moatize is operated by Brazilian company Vale

Smaller mining enterprises are also active in the vicinity. Almost all foreign private investment in Mozambique is channelled into the raw materials market.

Economist Carlosa Nuno Castel-Branco believes this to be a worrying development, because the raw materials sector is not linked up to the rest of the economy.

Huge sums of money are being made with raw materials, he explains, and this enables the companies to get round the lack of infrastructure by building it themselves. "If they need a road, they build one,  if they need a port, they build one. If they need lettuce in vast quantities, they import it from South Africa," he told DW. Most of the people here with well-paid jobs come from abroad. The more important contracts with the mining firms are awarded to large and medium-sized companies. For smaller firms and the individual businessman, there's not much left over.

At the beginning of the 1990s, Mozambique was one of the poorest countries in the world. It was engulfed in civil war which pitted the leftist FRELIMO government against RENAMO rebels who were backed by the West. But more recently the economy has been growing by as much as seven percent per year. Nonetheless, the number of people below the poverty line has not declined and the country still ranks 184th in the UN's Index for Human Development.

Mozambique is close to the bottom of the table, the only countries that are even less developed are Burundi, Niger and the Democratic Republic of Congo.

Mozambique has seen little of the proceeds of the coal boom. The huge mining projects enjoyed enormous tax breaks. The anti-corruption NGO, Center for Public Integrity (CIP), which has been investigating Vale's activities, says the mining giant benefitted from a 15 percent reduction in Mozambican sales tax over the first ten years and a 50 percent discount on the Mozambican purchase tax on real estate. Vale was also largely exempt from customs and stamp duties, and VAT. Foreign employees working for Vale also didn't have to pay income tax.

'It's up to individuals'

Vale invested $2 billion in its mine in Moatize, some 20 kilometers (12 miles) from the provincial capital, Tete.

Looking down on Moatize Photo: Marta Barroso

Vale invested 42 billion in Moatize

Huge mountains of coal are stacked one after the other in the black valley. Excavators are in operation day and night; every one of the huge trucks that ferry the coal away can carry as much as 400 tons. 

Paulo Horta, operations director at Vale Mozambique, says people in Tete and Moatize are benefitting greatly from the mine. "So far we have trained approximately 600 young people from the region to work in the mine," he says. Works employees also have to be supplied with food and accommodation, which boosts the local economy. That, he says, is far more important than the taxes the company pays to the state.    

Alberto Vaquina was governor of Tete province until October 2012 and is now the Mozambican prime minister.

Former governor of Tete province Alberto Vaquina
Photo: Marta Barroso

Alberto Vaquina was governor of Tete Province when families were forcibly resettled

He doesn't understand why the government should do more to ensure a more just distribution of the country's new wealth, insisting it is up to individuals to ensure how they personally derive some profit from the boom in natural resources. "Everybody has to fight for emancipation themselves. In other words, I, as a citizen, must find a way to lead a dignified existence by using my energy and my intelligence and not end up depending on one single company," Vaquina said.

Greater emancipation, less dependence

Such words will not go down well with the families under whose houses coal deposits were discovered. Hundreds of people were forced to abandon their homes between the end of 2009 and the beginning of 2010 so that mining could start. Vale promised them new houses, new jobs, new schools, new hospitals and free food. The evicted families say almost none of these promises have been kept. They now live in a settlement called Cateme, some 40 kilometers away from Moatize where they used to live.

Julio Calengo is a regular visitor to Cateme and the evicted families. He works for the NGO League of Human Rights. He heard how several residents were beaten up by the police and arrested during a demonstration at the beginning of the year.The same fate befell Gomes Antonio Sopa, even though he didn't even attend the protest. When he sits down for long periods, he still feels the pain. It was on January 10, 2012, when hundreds of local residents blocked the railway line along which the coal is freighted from the mine in Moatize to the port of Beira on the Indian Ocean.

A child in Cateme Photo: Marta Barroso

Residents of Cateme are waiting for promises to be kept

They wanted to draw attention to their grievances and find out why Vale had not kept its promises. To this day they have received no answer to that question.

Gomes Antonio Sopa said Vale had promised those who had lost their homes that they would be given work with a construction company. But the jobs failed to materialize. Promises of electricity for everybody were also not kept. The free food with which they were supposed to be supplied for five years was stopped after 12 months. The new houses in Cateme were in poor condition even after they had just been completed. There are cracks in the walls and the rain comes in. Repairs have been promised. Tents have now been put up and the residents are supposed to live in them for as long as repair work, carried out by the construction company CETA, continues.

Politicians among the beneficiaries

Vale's Paulo Horta says he is proud that his organisation did almost a billion euros' worth of business in 2011 with companies based in the country. They include CETA, which belongs to a group whose biggest shareholder is Mozambique's president Armando Guebuza.

In January 2012, the British paper The Guardian reported that Vale had picked up the dubious distinction of being the corporation with the most "contempt for the environment and human rights." The company had clocked 25,000 votes online from members of the public.  If the inhabitants of Cateme had Internet access, the number would undoubtedly have been higher.                           

DW.DE