Mozambique Mining: Before gas, rubies account for half of Cabo Delgado state revenue

More than half the revenue pouring into state coffers in the province of Cabo Delgado in the last five years has come from taxes associated with the exploitation of Namanhumbir rubies.

According to figures from the Mozambican Tax Authority, mining company Montepuez Ruby Mining’s largest contribution was registered last year, with the company accounting for about two of the just over three million meticais state tax revenue.

Tax Authority forecasts indicate that this value may increase next year with the entry into operation of modern stone sorting machinery which could double processing capacity.

Namanhumbir rubies was discovered in 2009 and for several years were exploited only by artisanal miners, mostly illegal foreigners. Only in 2012, with the start of legal mining, did the Mozambican government begin to receive any revenue from the gems. Since then, some 73 million meticais have entered the state coffers, mainly in the form of corporate taxes and duties from the Montepuez Ruby Mining – 26 percent of the company’s revenues.

Montepuez Ruby Mining is a consortium of Mozambican companies, with 25 percent of shares, and English multinational Gemfields, with 75 percent, and is currently the largest contributor of revenue in Cabo Delgado, and one of the largest in the country.

According to data from MRM, the company earned more than US$300 million from sales of precious stones weighing in at about 50 million carats and extracted from the Namanhumbir mines.

Investments and social responsibility

In addition to taxes, the company has spent US$100 million in the last 6 years, more than half on the mining unit itself and the remainder on to social responsibility projects including primary schools, water supply and income-generating projects.

The company has elected to reserve one percent of its profits from ruby sales in favour of the communities living around the mine, who also receive 2.75 percent of state revenue resulting from the exploitation of mineral resources from the government.

According to the chairman of the MRM board of directors Samora Machel Júnior, the company will invest another US$200 million over the next two years installing a modern ruby sorting unit with the capacity to process 20 million carats per years, against the current 10 million per year.

With the increase in production capacity and the exploitation of other mineral resources in the province, the Cabo Delgado provincial government hopes to maintain its fiscal balance and continue to contribute to national gross domestic product. By Hizidine Achá. Source: O País