On the second day of our climate justice conference here in Maputo, Mozambique, with over 100 people in the room with us again today, JA! with our colleague Tim Jones from the Jubilee Debt Campaign, launched a new report on the situation of coal finance in Mozambique.
The report is titled: “The Economics of Coal: Where are its Benefits?” The English version of the report can be found on our Issuu page here. The introduction of the report lays out the situation perfectly:
“Despite much talk, the anticipated coal mining boom in Mozambique has never taken off. Just three mines are operating, probably exporting just over 4 million tonnes of coal in 2015 (compared to claims of 30 million tonnes of exports just a few years ago). Internally there have been difficulties in transporting coal from Tete province to the coast, and coal produced has been of a lower quality than expected. Externally, the price of coal has been falling over recent years and collapsed in 2015 as China’s construction boom ended, and major economies have begun to turn away from coal given its high local and global pollution costs.
Today, all the existing coal mines operating in Mozambique are running at a loss, and there can be little expectation of further development based on current global coal prices. However, even if coal prices did recover, the costs of coal
mining in Mozambique far outweigh the benefits.
In 2014, the Mozambique government received just 13% of revenue generated from coal mines, but it is likely that this percentage has fallen further with declines in coal price and profitability. Coal mining is likely to account for just 1% of the government’s total revenue, in 2015 between $44 million and $50 million. In contrast, we have identified more than $700 million of loans to the Mozambique government which were supposedly spent on transport infrastructure for the coal industry and technical advice on managing the coal industry. Even if these came with 0% interest rates, which they didn’t, it would take between 14 and 16 years at current revenue levels just to recoup this money. There is likely to be other public funding spent on infrastructure development for coal mines which we have not identified, or has not been made public.
Extractive industries by their nature employ few people. Currently there are at most 3,000 Mozambicans employed directly by the coal mines,4 with mining making up just 0.6% of employment in Tete province. In contrast, 3,500 families (around 17,000 people) have lost their farmland through the development of coal mines so far, many of whom have not received land of similar quality in return. Mining has had a net destructive impact on livelihoods.”
This report launch wasn’t the only highlight of the day. Today we heard from Trusha Reddy of the International Coal Network about the situation of coal worldwide, the need to end coal and she shared some coal struggles from across the world. We then heard from Vijayan M.J. of Programme for Social Action, India, speaking about some victories of the communities in India fighting back against coal and other infrastructure projects. He talked about the importance of not feeling alone, and linking struggles across continents, such as the struggle against Jindal Indian company, now operating in Mozambique. We then had a very strong and emotional panel, hearing from communities speaking out against the Vale and Jindal coal mining in Tete province of Mozambique, and from Matthews Hlabane from South Africa’s Mpumalanga province, demanding a revolution against the lying mine-owners everywhere.
All this happened before lunch! After lunch, we worked to denounce gas being called as a transition fuel. Mozambique has discovered a huge gas reserve off our northern coast, but we discussed how the emissions of gas are still really high, and the pollution and leaks are known to be horrific. We made connections between the current debt and financial crisis situation of Mozambique, linked to extensive borrowing which happened on the backs of the gas reserves.
The third and final day of the conference takes place tomorrow.