Mozambique 19 January 2016: Floods, droughts, and great gas expectations
Good afternoon. Mozambique is on ‘orange alert’ this week - one level down from the maximum state of disaster alert - due to the twin perils of flooding, principally in the north of the country, and the drought which is entering its second year in the south, putting half a million people in danger of hunger.
Zitamar News spent 24 hours in Chigubo, Gaza - the district most seriously affected by the drought - at the end of last week and can testify that people are suffering. Their barns, which they filled with grain after the 2013-14 rainy season, saw them through last year’s failed rains but were empty by the time this rainy season was supposed to start. Today we report on warnings that if the rains don’t come soon, those people will be dependent on food hand-outs until the end of the next rainy season, in 2017.
SEE: Drought-hit Gaza could need food aid through 2017, warns UN
The drought, combined with floods which have so far killed 33 and are expected to displace thousands more, weighed on the Bank of Mozambique’s mind last week when the monetary policy committee decided to hold the lending rate at 9.75%. The central bank does not want to choke off economic activity through higher interest rates when natural conditions are making things challenging enough. However,they admitted hitting their 7% growth and 5.6% inflation targets in 2016 would be ‘challenging’.
SEE: Bank of Mozambique says hitting 2016 targets will be ‘challenging’
Flooding typically contributes to inflationary pressures as key logistics routes in the country become impassable. This has already happened with the Tete-Beira Sena rail line, as we report today. The incident recalls one in 2013 which paralysed coal exports for more than two weeks and reportedly cost Vale and Rio Tinto $8 million. ICVL, which has since bought Rio Tinto’s Tete mines, is unlikely to be as badly affected this time around, having put its mining activities on hold while it looks for a cheaper contractor. Vale meanwhile should start using its new Nacala line any time now - and may also be able to sell some capacity on that route to ICVL and others.
SEE: Floods cause Vale coal train derailment on Sena line
SEE: ICVL puts Mozambique coal mine on hold in search of cheaper contractor
As if Tete’s natural disasters weren’t bad enough, it seems the province is also host to what Africa Confidential is calling Mozambique’s ‘undeclared war’. Fighting has already caused upwards of 2,000 refugees to flee across the border into Malawi. There has been little in the Mozambican press about clashes in recent weeks, but the exodus of refugees suggests the conflict is far from over, and has led the UN’s refugee agency, the UNHCR, to up its aid efforts there.
SEE: NGOs scramble to deal with refugee exodus from Tete
Finally, Maputo plays host this week to two oil and gas conferences running concurrently at the Pestana Rovuma hotel on Thursday and Friday - the World Gas Congress Africa, and the Deepwater East and Southern Africa Congress. The figure on everyone’s lips will be the IMF’s new estimate for Mozambique’s LNG export potential - 89 million tonnes per annum versus their previous estimate of 20 mpta. The Fund’s economists came to their new figure after discussions with the developers, Anadarko and Eni, and decided they could build 13 onshore LNG trains and four offshore, as opposed to just the total of four trains the IMF had assumed until now. But the question all will be asking is: can Anadarko and Eni find buyers for all that gas?