Mining companies at a Nacala conference told the government that local processing of resources depends on dependable electricity and usable roads.
Mozambique's government is pushing mining and energy investors to process more resources locally and increase purchases from Mozambican businesses. However, at the CAVAME-d conference in Nacala, investors highlighted that reliable electricity and usable roads are prerequisites for such ambitions. Syrah Resources, operator of the Balama graphite mine, cited deteriorating road connections to Pemba and Nacala and continued reliance on diesel generators as significant constraints.
The company representative explained that further graphite processing would require dependable electricity, questioning the economics of adding production stages under current conditions. Nampula governor Eduardo Abdula acknowledged roads and reliable energy as priorities for industrial development, reinforcing the need for public authorities to invest, plan, and coordinate these essential services. The government's push for local content requires a reciprocal commitment to providing necessary infrastructure.
While retaining more value from Mozambique's resources through domestic processing can create jobs and expand the tax base, these benefits are contingent on competitive operations. The costs associated with unreliable power and difficult transport can undermine the economic viability of domestic processing, potentially leading to minimal investment despite contractual obligations.
Why it mattersInvestors face increased operational costs and uncertainty regarding the economic feasibility of local resource processing due to unreliable infrastructure.
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