Mozambique Mining: Small and medium Tete companies suffer from low coal price

In the central Mozambican province, miners still live hard times due to the low price of coal. This also brings negative consequences for national small and medium enterprises.

In the province of Tete, mining companies continue to accumulate high losses due to the continuous fall of coal prices in international markets and the high costs of operation. In February this year, one ton of coal was being sold on average for just over $ 60. In 2012, the price reached more than 90 dollars per ton, according to the World Bank.

Vale Mozambique, which operates the coal in Moatize district, recorded in 2014 losses of 507 million US dollars, almost double the losses for the previous year. To meet the costs, in late 2014 the company sold to the Japanese Mitsui 14 percent of the mine in Moatize.

But the damage is not only the amount. According to the businessman Gafar Beca, all the business environment in the province is being affected: “There has been a certain withdrawal in investments.”

SMEs have been hit

Faced with this crisis, many small and medium enterprises (SMEs) in Tete city begin to close the doors. The citizen Elton Michel is a witness. “We started to watch the withdrawal of many companies. There is a loss of foreign exchange. There is little circulation of money because the mining companies represented here will cease their employment contracts.”

Recently, in the face of constant coal price falls, the director of Jindal Africa announced that his company will terminate the contracts with the companies it outsourced.

A source from the Provincial Directorate of Mineral Resources of Tete province revealed to DW Africa that many workers may be unemployed in the near future, because the mining companies will reduce operating expenses.(Source:DW)