Violence In Mozambique Is A Threat To Country’s Energy Boom

Violence In Mozambique Is A Threat To Country’s Energy Boom

Mozambican army clashes with former rebels may disrupt coal shipments and public transportation without heralding a return to civil war, said analysts such as Alex Vine, head of the African program at Chatham House.

The Mozambique National Resistance, known as Renamo, said it was ending the 21-year-old peace agreement with the southern African nation’s ruling party after army troops captured its headquarters in the Gorongosa mountains on October 21.

The action followed Renamo attacks on arms depots and buses this year that killed several people and forced the closing of rail lines used by coal mines owned by Rio Tinto Plc.

“The markets are concerned — adds additional risk for lenders and could make it more difficult for Mozambique to raise funds for infrastructure if this drags on,” London-based Vines said yesterday in an e-mailed response to questions.

“The coal mining companies have also seen their costs rise.”

Renamo fought a 17-year civil war against the ruling Front for the Liberation of Mozambique, or Frelimo, until signing a peace agreement in Rome in 1992.

It has served as the main opposition party for two decades without threatening Frelimo’s hold on the presidency and parliament.

Renamo leader Afonso Dhlakama’s electoral support dropped to 16.4 percent in 2009 from 47.7 percent a decade before.

“The leadership of Renamo is making a last-minute desperate attempt to get concessions from the Frelimo government,” Robert Besseling, senior Africa Analyst at IHS Country Risk, said in phone interview from Johannesburg.

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“They know that this is the end for them.”

Economic Growth

Fuelled by transportation, communications, the world’s largest discovery of natural gas in the past decade and coal mining operations run by Rio Tinto and Vale SA, Mozambique’s $15 billion economy is expected to expand 7.4 percent this year, according to government forecasts.

The former Portuguese colony plans to open a liquefied natural gas terminal in 2018 that will be the second-largest export site in the world after Ras Laffan in Qatar.

Anadarko Petroleum Corp. and Eni SpA are among companies investing in gas production in the country.

“The primary risk to gas development will be elevated risk perceptions,” Mark Rosenberg, an Africa analyst for New York- based Eurasia Group, said in an e-mailed response to questions.

“Given the geography of the nascent gas infrastructure and that Renamo cannot sustain a wide-ranging or prolonged insurgency, physical risks from recent events are quite low.”

Renamo Strongholds

US State Department deputy spokeswoman Marie Harf yesterday urged both sides to “take steps to move back from the brink.”

Pursued by the army, Dhlakama is now holed up in the central province of Sofala, close to his bush strongholds during the civil war.

Support from the former white-minority governments in Rhodesia, now Zimbabwe, and South Africa that backed Renamo during the conflict has ended.

“It’s only in a very small area of Mozambique where Renamo still has a presence and a fighting capability,” Besseling said.

“It does not have the capability to stage large-scale attacks on the military.”