Mozambique - February Economic Digest

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SUBJECT: Mozambique - February Economic Digest


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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
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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
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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
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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
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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