Mozambique - February Economic Digest

UNCLAS SECTION 01 OF 02 MAPUTO 000308 SIPDIS SIPDIS AF/S FOR HTREGER AND JMALONEY JOHANNESBURG FSC FOR RDONOVAN JOHANNESBURG TDA FOR DSHUSTER USDOC FOR RTELCHIN MCC FOR SGAULL USAID FOR AFR/SA E.O. 12958: N/A TAGS: ECON EAID EINV ETRD MZ SUBJECT: Mozambique - February Economic Digest MAPUTO 00000308 001.2 OF 002 ¶1. This is a brief summary of significant economic developments in Mozambique during February 2007. We provide it as a supplement to our other reporting. The items discussed are: -- Mozambique Launches Road Sector Program -- Norwegian Firm to Build New Aluminum Smelter -- Chibuto Titanium Mine to be Scaled Back -- MOU Signing Kicks-Off PROAGRI II -- Japanese to Support Mozambican Technology Institute -- Microsoft Continues Assistance to Mozambique Mozambique Launches Road Sector Program -------------- ¶2. On February 28 the Government of Mozambique (GRM) and international donors launched the Integrated Program for the Road Sector (PRISE). PRISE is scheduled to start during the first quarter of 2007 and run through 2009. The GRM will contribute 30 percent of the required funding for the project, currently estimated at USD 1 billion. Restructuring the National Road Administration (ANE) at both provincial and central levels is part of the new program, which also includes the nomination of a new ANE Board of Directors and executive director. The GRM and donors worked together to develop the program, which focuses on the construction, repair and maintenance of roads and bridges, the development of lower cost materials and a road safety campaign. PRISE is part of the overall Road Sector Strategy, which covers 2007 through 2011. Norwegian Firm to Build New Aluminum Smelter -------------- ¶3. During his visit to Norway in the middle of February, President Guebuza announced that a Norwegian firm planned to construct a new aluminum smelting plant in Mozambique, in Sofala province in the center of the country. This smelter would be the second in Mozambique; in 2000 the Australian company BHP Billiton and partners constructed the Mozal smelter outside Maputo. According to diplomatic sources in Maputo, the Norwegian company is Norsk Hydro. In 2006 Norsk Hydro won rights to an onshore concession in the Rovuma basin (near the border with Tanzania) to explore for oil and gas. According to press reports from the Guebuza visit, Mozambique annually receives approximately USD 70 million in assistance from Norway. Chibuto Titanium Mine to be Scaled Back -------------- ¶4. The Australian mining giant BHP Billiton is going to reduce the scale of its planned titanium mine project at Chibuto, in southern Mozambique, according to press reports in late February. (Note: The Chibuto mine has not yet gone into production.) BHP Billiton said it planned to reduce activity because of a fall in the world price of titanium. The company will initiate a new study of the resource at Chibuto next year, with a view toward reducing the level of output. According to BHP Billiton, Chibuto has supplies of titanium sufficient to sustain mining activity for "100 years." BHP Billiton purchased the Chibuto concession from WMC Resources in 2005. MOU Signing Kicks-Off PROAGRI II -------------- ¶5. On Monday February 12, Glauco Glazuola, head of the European Commission and Henrique Banze, Deputy Foreign Minister, signed a memorandum of understanding to grant funds for the second phase of the Agriculture Development National Program (PROAGRI II). Under the program, donor nations pledged nearly USD 20 million for 2007 through 2009. These funds would continue programs from PROAGRI I and start implementation of the second phase. The focus of the PROAGRI program, part of the overall Absolute Poverty Reduction Action Plan (PARPA II),is to support small farmers, conserve natural resources and develop commercial agro-industries for both domestic consumption and export. Japanese to Support Mozambican Technology Institute -------------- -------------- MAPUTO 00000308 002.2 OF 002 ¶6. The Japanese International Cooperation Agency (JICA) announced in February financial and technical assistance to the Mozambican Institute of Information and Communications Technologies (MICTI) for the training of mid-level technical staff. Under the program, Mozambicans will receive technical training in Japan and Japanese specialists will come to Mozambique. In addition, MICTI will receive a new library, along with laboratory material and equipment. An initial disbursement of USD 500,000 covers the first phase of the project, which will run through 2009. Microsoft Continues Assistance to Mozambique -------------- ¶7. On February 21 Microsoft Corporation and the GRM signed a three-year partnership agreement that introduced a framework for the purchase and management of Microsoft licenses in government and public institutions. The agreement also facilitates Mozambique's ability to access Microsoft's Information and Communication Technologies (ICTs). This agreement continues a relationship between Microsoft and Mozambique that started in 2004, and allows for the adoption of standard prices, with bonuses for government institutions and possibly some public companies. Initially over 2400 computers in various Ministries and government institutions will receive licenses. Johnson