Gemfields mine invasion highlights hazards of operating in Mozambique

JSE-listed gemstone producer Gemfields has halted operations at its Montepuez Ruby Mining (MRM) in northern Mozambique following an attempted invasion of the site by about 200 people the company says are connected to illegal miners in the area.

Gemfields share price is down nearly 40% since September, and dropped more than 10% last week on news of the attack.

The invaders set fire to external structures at the mine village as well as a community cash point. A vocational training centre built by the company in the nearby village of Wikupuri was also looted and damaged. The looted inventory included farming implements that were to be distributed to more than 800 farmers in the area.

Security forces from both the Mozambican police and military protected the mine village using a staged escalation of force, according to a Sens statement by the company.

Two people were declared dead after being shot during the invasion attempt, which took place on 23 December.

The looters appear to have taken advantage of post-election violence that has swept across parts of the country, disrupting transport routes and forcing several companies to temporarily scale back operations.

The latest bout of violence has left nearly 250 dead following a disputed election result which returned the ruling Frelimo party to power.

The Mozambican Constitutional Council last week confirmed the result, which opposition groups say was rigged. This triggered another bout of violence, with 33 people killed when 1 500 inmates broke free from a maximum security prison near Maputo.

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Meanwhile, the US State Department expressed its concern over the elections results, and called for peaceful collaboration.

“Civil society organisations, political parties, the media, and international observers, including those from the United States, cited significant irregularities in the tabulation process, as well as concern about the lack of transparency throughout the election period,” it noted.

The US has called on Mozambique to commit to “serious electoral and institutional reforms” to secure the future of the country as a genuine multiparty democracy.

Opposition leader Venâncio Mondlane has urged Mozambicans to take to the streets in peaceful protest against the election results.

He repeated this call after his legal advisor Elvino Dias was assassinated earlier this month by unknown assailants.

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Safety and security

Gemfields says its priority remains the safety and security of its personnel and contractors, prompting to relocate several staff to offsite locations. It expects to return to normal operations by the end of the year (2024).

The group has had to fend off repeated invasions and disruptions at the Montepuez mine, one of the world’s largest ruby mining operations. In October Mozambican police shot and killed two people after a group of 300 invaded one of its pits, according to a Bloomberg report.

Gemfields says this was the result of a disinformation campaign promoted by illegal ruby smuggling syndicates that suggested the mine was open to anyone.

In 2020, a group of 800 invaded the mine, resulting in 11 people dying at one of the pits. There was a “dramatic and coordinated increase in the number of artisanal miners entering MRM’s concession,” according to the company.

MRM, 75% owned by Gemfields, is located in the Cabo Delgado province which has been gripped by multiple attacks from the Islamic State in recent years.

Last week Sasol announced it was cutting natural gas production at its Temane facility in Mozambique in response to the escalating violence.

ALSO READ: SA pushes for dialogue and stability in Mozambique

The decision, prompted by a need to protect staff and infrastructure, reduces the flow of natural gas via the Rompco pipeline that feeds industries in Mpumalanga, Gauteng and KwaZulu-Natal.

South32, which owns 63.7% of the Mozal Aluminium smelter in Mozambique, said it had reduced power supply to the potlines in an effort to preserve raw materials and maintain operational stability.

“If trucking of raw materials to the smelter is disrupted on an ongoing basis, we may need to consider further mitigating action, including potential curtailment of potlines at Mozal Aluminium.

“If this were to occur, the supply of alumina from our Worsley Alumina refinery would be sold to third party customers at market prices,” the company added in a Sens statement.

This article was republished from Moneyweb. Read the original here.