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GDP Still Heavily Dependent on Extractive Industries and Mining

GDP Still Heavily Dependent on Extractive Industries and Mining

Mozambican government figures show a strong dependence of Gross Domestic Product (GDP) on the extractive industry and mining sector, which reached 10.55 per cent in 2022, to stand at 32.58 per cent in the first quarter of 2023 and 42.71 per cent in the second quarter of the same year.

In fact, no other sector of the economy achieved a similar performance and several sectors experienced the opposite movement, namely the construction sector which fell by 10.31 per cent, the manufacturing industry slowed down by 7.77 per cent and fishing fell by around 9.16 per cent.

According to the executive, overall real GDP grew by 4.17 per cent in the first quarter of 2023 and by 4.67 per cent in the second quarter of the same year.

“In terms of the most recent sectoral dynamics, with regard to GDP growth in the third quarter of this year, the impetus given by the extractive industry stands out with a variation of 43 per cent, with a structure of the Gross Domestic Product dominated by the agricultural sector and related activities which accounts for around 23 per cent of overall production, followed by the transport, logistics and communications sector with 11.2 per cent,” the government said.

This trend consolidates Mozambique as one of the world’s important exporters of high-value minerals, such as coal, graphite and rubies, which further adds to the country’s challenges in the global market for precious stones and metals.

While it reports gains in the national mining sector, it also influences perspectives on the future industry in a context where the planet is trying to harmonise energy challenges and mineral exploitation.

Recently, during the inauguration of the Geology Laboratory of the National Mining Institute (INAMI) in Maputo, a project that cost the state 190 million meticais, the President of the Republic, Filipe Nyusi, emphasised the need for greater transparency in the marketing of minerals.

Nyusi pointed out that mining is one of the sources of export revenue and that the sector has seen significant growth, representing 10.4 per cent of the Gross Domestic Product (GDP) in 2022, compared to 9.8 per cent in 2021 and just 1.8 per cent in 2011.

The President also mentioned the importance of rigorous inspection and control of artisanal mining, pointing out that more than 229,000 small producers are active in the area, generating income for more than 800,000 people, underlining the government’s commitment to promoting transparency and the sustainable development of the mining sector in Mozambique.

In a recent interview with Profile, Geert Klok, President of the Mozambican Chamber of Mines (CMM), an organisation that integrates a large part of the mining value chain, establishing partnerships between various players operating in the mining value chain inside and outside Mozambique, spoke of the contribution and challenges of the industry, pointing to graphite as one of the ores considered fundamental to the achievement of Mozambique’s objectives as a source of this raw material.

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In Mozambique, the extractive industry has seen significant growth, rising from 1.8 per cent of GDP in 2011 to nearly 10.6 per cent in 2022, an increase that, in about a decade, reflects the development of the Moatize coal project in Tete province, six of the heavy sands projects located in Moma, Pebane and Chibuto, respectively, in the provinces of Nampula, Zambézia and Gaza.

Overall, the country’s economic outlook, in a context of slowing inflation and exchange rate stability, the result of restrictive measures now being implemented and cooperation and normal weather conditions, points to growth close to 5.5 per cent of GDP in 2024, a target that the government intends to reach or even surpass.

The trend will be driven by the strength of the extractive industry, with the restart of the development phase of the onshore modules of the Golfinho Tuna natural gas project in Area 01, the capitalisation of the rail-port corridors, given the investments made, road and air mobility, and the growth of tourism.

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