Mozambique’s exports driven by aluminium, coal, gas and agricultural products

27 June 2011

London, United Kingdom, 27 June- Mozambique’s exports are expect to increase over the next two years, with greater sales of aluminium, coal, gas and agricultural products, thus allowing for the country’s balance of trade deficit to contract in 2012, according to the Economist Intelligence Unit (EIU).

In its latest report on Mozambique, the EIU raised its projections for exports of Mozambican products from US$3.4 billion to US$3.6 billion this year, benefitting from the rise in price of raw materials on the international market.

“Projections for Mozambique’s exports, dominated by aluminium, are positive,” the report said.

World demand for aluminium, which in Mozambique is produced by Mozal, the country’s largest company, is expected to see average growth of 5.7 percent per year over the next two years, with prices rising sharply this year and falling slightly next year.

“Coal exports could make a significant contribution as of the end of 2011, but could be delayed due to associated infrastructure,” the report said.

In May, Brazil’s Vale started production at its mine in Moatize, in Tete province, and exports are due to start in July of this year and reach 1 million tons in this initial phase.

For next year, the target for exports is 6 million tons of coal, almost doubling to 11 million by 2014.

The Moma mine, owned by Ireland’s Kenmare Resources is already operating, and, at the end of the year, production at the Benga mine, owned by Australia’s Riversdale Mining, is also due to begin.

Vale and Riversdale plan to channel production along the recently rebuilt Sena railroad, along the Zambezi valley, to the port of Beira, but the facility has an insufficient maximum capacity of around 5 million tons per year.

Thus, the Brazilian group is investing in another railroad to link the deepwater port of Nacala and Riversdale is considering transporting the coal by barge along the Zambezi River.

Another positive impact expected for exports of Mozambican products is that of natural gas, due to an expansion from the end of this year, as well as of agricultural products, “as a result of government investment in the sector.”

In 2012 exports are expected to total around US$4 billion, which is an increase on the previous projection of US$3.6 billion.

The trade deficit for services is expected to drop, with imports related to the mining sector being more than offset by exports linked to tourism.

Imports are also expected to see strong growth over the next two years due to high oil prices and demand from large raw materials projects and infrastructure underway in the country.

The Mozambican trade deficit is expected to increase from 11.2 percent of gross domestic product (GDP) in 2010 to 12.3 percent of GDP in 2011, falling to 9.7 percent in the following year, according to EIU projections.

Largely because of increasing investment in mining and infrastructure projects, the EIU projects average economic growth of 7.4 percent per year for the Mozambican economy in 2011 and 2012. (macauhub)