The Cabo Delgado conflict hasn’t stopped profiteering

The Cabo Delgado conflict hasn’t stopped profiteering

It has been four years since the onset of the insurgency in the northern Mozambican province of Cabo Delgado, which has forced the French oil gian

It has been four years since the onset of the insurgency in the northern Mozambican province of Cabo Delgado, which has forced the French oil giant, TotalEnergies, to declare force majeure and stop its operations in the Afungi peninsula. But a recent study found that mining in the province is forging ahead despite the conflict.

By Luís Nhachote

In July 2021, Maputo-based NGO the Centre for Public Integrity published a study showing that requests for mining concessions in Cabo Delgado have increased in tandem with the raging armed conflict.

The study also showed that the biggest single holder of concessions in the province is Mwiriti Mining, owned by retired general Raimundo Domingos Pachinuapa and his Iranian business partner Asghar Fakhraleali.

Their company owns 7% of all the concessions in the province, but that figure could rise to around 10% if other mining projects where it is a shareholder are included.

Lucrative mines, with some torture 

Raimundo Pachinuapa is a veteran of Mozambique’s struggle for independence from Portugal, and a senior figure in the ruling Frelimo party, being a member of Frelimo’s 19-strong Political Commission, which guides party policy on a weekly basis.

A member of the Makonde ethnic group to which President Filipe Nyusi belongs, from Cabo Delgado, Pachinuapa was governor of the Cabo Delgado province between 1980 and 1983.

His company, Mwiriti, rose to prominence after a peasant discovered a rich vein of rubies in 2009, in the locality of Namanhumbir, in the district of Montepuez. The find has since been described as “the most important ruby discovery of this new century” by the Gemological Institute Of America.

Soon after the discovery, Mwiriti took control of the area, and in 2011 formed Montepuez Ruby Mining (MRM), a joint venture between Mwiriti, with 25%, and Gemfields, which owns 75% of the company. The mining operation occupies 33.6 hectares of land.

Despite formally having capital of just 30,000 meticais (around $1,000 at the time), and without any prior capabilities for exploitation of mineral resources or experience of the international market for precious stones, Gemfields paid Mwiriti $2.5 million for 75% in the joint venture, MRM.

Year after year MRM has been selling gems in international markets and making a huge profit. However, the mining operations have not been without controversy. Videos surfaced in 2012 following the torture of illegal miners who were digging for rubies in Nahamamumbir by Mozambique’s security forces (FDS) to ensure that they cleared the area.

People in Cabo Delgado believe some of those youths who were treated so brutally in Montepuez might have been recruited by the insurgents to join their ranks.In 2019, Gemfields agreed to pay £5.8 million ($7.6m) in compensation to people living around its ruby mine in Montepuez, who allege they were the victims of human rights abuses by the police and security guards employed by Gemfields. The company agreed to make the payment without admitting any liability, though it said it had been “proactive and constructive in addressing the wider issues raised by local communities through this case.”

Later that same year, Gemfields and Mwiriti announced a new joint venture to develop gold mines in Cabo Delgado.

MRM told The Continent they have “investigated carefully” suggestions that their project might in some way have fed feelings of inequality and alienation that have fuelled the insurgency — and concluded that such a suggestion is “absurd and misleading.”

“Save for the recent arrival of internally displaced persons in the ruby mining areas, the area affected by the insurgency lies in the gas project areas, not in the ruby mining areas,” the company pointed out.

Meanwhile, artisanal mining continues on MRM’s concession, despite the best efforts of police and private security to crack down on the activity. MRM said that it knew of 21 people who died while mining illegally on its concession in 2020, and a further eight by the start of August this year. Most of the deaths were due to the collapse of the mines they had dug.

Owners in hiding

In 2019, Mwiriti earned $17.9 million from auctioning rubies in Singapore, while Gemfields took the largest share, with $71.5 million. In June 2014, MRM sold rubies for a total of $33.5 million at an auction in Singapore.

Mwiriti has come a long way from the company registered to offer services in the areas of building, sale of foodstuffs, office equipment, general trading and lobbying. It was only in 2009 that it included in its business portfolio the “prospection, research, exploitation of mineral resources, including import and export”.

But the CIP report raises another concern: the company has apparently shifted ownership of its mining concessions offshore, to a mysterious company called Nairoto Resources Holding, domiciled in Mauritius — known as ‘Africa’s tax haven’.

That means, CIP pointed out, that “it becomes difficult [to] identify the beneficiaries of the concessions, which can be Mozambicans in conflict of interest,” or even “”with power and political capacity to influence the dynamics of the sector for their own benefit”.

Where owners of Cabo Delgado’s mining concessions can be identified, however, the names of powerful families such as Chipande, Chissano, Talapa, and Waty crop up — “easily identifiable with the country’s political elite”, as CIP says, showing that “a good portion of the concessions is owned by politically exposed people or directly linked to influential individuals from the Frelimo party, in power since Mozambique’s independence.”

Mwiriti issued a statement following CIP’s report, saying that the use of offshore structures was perfectly legal, and mining activities are still carried out in-country. CIP’s researchers suggested, meanwhile, that the lack of transparency over who really owns mining concessions “may be behind land conflicts” in Cabo Delgado — and that publishing the names of beneficial owners “may minimize the occurrence of the reported and future conflicts.”

But if greater transparency only reveals the true extent to which Mozambique’s riches are concentrated in the hands of a privileged few, then deeper changes will be needed to overcome the resentment that is contributing to unrest in Cabo Delgado.

This article was published first time at the https://mg.co.za/thecontinent/

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