KENMARE RESOURCES says it understands that mining-law revisions in Mozambique will not affect its current titanium operation in the country.
“We didn’t see anything that suggested that there was any form of radical step-out from anything that had previously been understood, anticipated and signalled,” Michael Carvill, managing director of minerals producer, said yesterday in an interview. “I don’t think the new mining law will have any effect on our operations as we are presently operating.”
Mozambique’s mineral resources minister Esperanca Bias said this week it was planned to revise the country’s mining law and would seek to give the state a share of projects in “strategic sectors” such as coal, triggering an 8.1 per cent slide in the company’s shares to a nine-month low.
“We have not heard any utterances from anyone that would suggest it’s retrospective,” Mr Carvill said, adding he was not at the conference in Maputo, attended by the company’s corporate lawyer.
“It might apply to our phase three, we could expect that as we do phase three. That is a new project and therefore the mining law would apply to that.”
Kenmare recovered 2.6 per cent to 56.4 pence yesterday after earlier declining as much as 3.3 per cent. Shares in the Dublin-based company has jumped 72 per cent this year and it has a market value of £1.4 billion (€1.56 billion).
The decline in Kenmare’s share price “is not justified given the strong outlook for mineral-sand prices”, RBC Capital Markets analyst Des Kilalea said in an e-mailed note yesterday. “If there is a change in Mozambique’s mining laws, it would only apply to new projects.”
Kenmare operates the Moma mine on the coast of Mozambique, with an annual capacity of 800,000 metric tons of the titanium mineral ilmenite, with associated production of zircon and rutile.
Mozambique began a series of meetings with licence holders and other interested parties about its plans, Ms Bias said at the conference. The government would not take any decisions without discussing them with the companies, she said in an interview later.
Resource-rich African nations, including Namibia, Zimbabwe and Guinea, are planning to revise mineral laws to take advantage of commodity prices that have surged on the global economic recovery.
The changes would affect all mining industries, including coal, gold and uranium, with any percentage of projects held by the state still up for discussion, Ms Bias said in the interview. – (Bloomberg)
