VZCZCXRO5773
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0598/01 1441548
ZNR UUUUU ZZH
R 241548Z MAY 07
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 7382
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP  0198
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MAPUTO 000598 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR HTREGER AND CKARBER 
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: April Economic Digest: Mozambique 
 
 
MAPUTO 00000598  001.2 OF 002 
 
 
¶1. This is a brief summary of significant economic 
developments in Mozambique during April 2007.  We 
provide it as a supplement to our other reporting. 
The items discussed are: 
 
 
-- China's Trade with Mozambique Grows 26 percent 
 
-- France Grants Debt Relief, Supports Limpopo Park 
 
-- Moma Mineral Reserves Increase, Mining Begins 
 
-- Cotton Production Up Significantly in 2005/2006 
 
-- First Quarter Inflation was 1.5 Percent 
 
-- European Commission to Finance Mozambican Sugar 
 
 
--------------------------------------------- - 
China's Trade with Mozambique Grows 26 Percent 
--------------------------------------------- - 
 
¶2. The head of Mozambique's export promotion 
institute IPEX, Joao Macaringue, told reporters on 
April 20 that trade between China and Mozambique 
reached USD 208 million in 2006.  This marked a 26 
percent increase over the volume of trade in 2005, 
he said.  Macaringue did not provide export figures 
for each country, except to say that Mozambique's 
exports to China were greater than China's exports 
to Mozambique.  He said that the vast majority of 
goods flowing from Mozambique to China were 
unprocessed natural resources (Embassy note: 
presumably logs and seafood).  He added that his 
government hoped exports in the future would 
include more processed goods, and that Chinese 
investment would arrive to increase local 
processing of natural resources.  (Embassy comment: 
Post believes that a significant amount of exports 
of Mozambican logs and seafood is not captured in 
official statistics.) 
 
--------------------------------------------- --- 
France Grants Debt Relief, Supports Limpopo Park 
--------------------------------------------- --- 
 
¶3.  On April 2 Mozambican Finance Minister Manuel 
Chang and French Ambassador to Mozambique Thierry 
Viteau signed an addendum to France's official 
bilateral debt relief contract with Mozambique, 
extending debt relief for an additional two years. 
The extension makes an additional 8.8 million euros 
available for various assistance projects in the 
country, including health programs in the northern 
province of Cabo Delgado, support for national 
HIV/AIDS programs and support to the national 
budget. 
 
¶4.  Both nations signed another agreement on April 
23, under which the French development agency, AFD, 
will give 17 million euros in development funding 
to Mozambique.  Eleven million will go to support 
development of the Limpopo National Park (PNL) in 
the southern province of Gaza.  The PNL is part of 
the Greater Limpopo Transfrontier Park, which also 
includes South Africa's Kruger National Park and 
Zimbabwe's Gonarhezou Park.  Other donors also 
supporting the PNL include the German Development 
Bank, the World Bank and the South African Peace 
Parks Foundation.  The remaining six million euros 
in French funding will go to the 2007-2009 
Mozambican state budget.  France is one of eighteen 
donor countries and organizations that provide the 
Mozambican government with funds for its national 
budget. 
 
--------------------------------------------- 
Moma Mineral Reserves Increase, Mining Begins 
--------------------------------------------- 
 
¶5.  On April 26 Kenmare Resources announced a 60 
 
MAPUTO 00000598  002.2 OF 002 
 
 
percent increase in titanium reserves at its Moma 
heavy minerals concession in Nampula province.  The 
new estimate, the result of recent excavations in 
the Nataka area of the concession, increases the 
mine's estimated reserves from 101 million to 163 
million tons.  Mining has begun on an experimental 
basis, with one dredger removing mineral-bearing 
sands.  The ore is then processed through a Wet 
Concentrator Plant to produce a heavy mineral 
concentrate, which will be separated at a 
separation plant (not yet in operation) into 
ilmenite (iron titanium silicate), rutile (titanium 
dioxide) and zircon (zirconium silicate).  Kenmare 
currently projects that it will produce 800,000 
tons of ilmenite, 21,000 tons of rutile and 1.2 
million tons of zircon annually, and that by the 
end of 2007 the Moma mine will account for 6.5 
percent of the worldQs titanium production. 
 
--------------------------------------------- -- 
Cotton Production Up Significantly in 2005/2006 
--------------------------------------------- -- 
 
¶6.  The 2005/2006 cotton harvest was 122,282 tons 
of raw cotton, the biggest since 1972/1973.  The 
harvest represents a massive increase over the 
2004/2005 production year, when only 78,683 tons 
were picked.  The Mozambique Cotton Institute (IAM) 
believes the significant growth is the result of 
both increased numbers of peasant families involved 
in cotton production and improved productivity. 
The 2006/2007 production year is expected to yield 
approximately 121,000 tons of raw cotton.  The 
slight decrease is predicted as the result of late 
rains in some cotton regions and some unwillingness 
by farmers stuck with cotton from the previous 
season to plant a new crop. 
 
-------------------------------------------- 
First Quarter Inflation was 1.5 Percent 
-------------------------------------------- 
 
¶7.  According to the Mozambican Central Bank, 
inflation for the first quarter of the year was 1.5 
percent.  Inflation in Mozambique is measured by 
the Maputo Consumer Price Index.  Large price 
increases were noted in a few main food products, 
namely tomatoes (up 27.4 percent), cabbage (up 17.2 
percent), onions (up 8.46 percent) and fresh fish 
(up 96.81 percent). 
 
--------------------------------------------- -- 
European Commission to Finance Mozambican Sugar 
--------------------------------------------- -- 
 
¶8.  The European Commission (EC) will provide six 
million USD to the Ministry of Agriculture to 
support the second phase of the sugar sector 
development.  The funding will promote 
participation by small and medium-sized Mozambican 
farmers in sugar cane production and improve the 
quality of social services in sugar production 
areas.  The funding is part of the ECQs technical 
and financial assistance program intended to assist 
ACP (African, Caribbean and Pacific) countries 
affected by the European UnionQs reformed sugar 
rules.  ACP countries no longer will receive a 
preferential price; however, they also no longer 
face quota restrictions.  Recent and planned 
investment in MozambiqueQs sugar industry by the 
private sector hopes to capitalize on the chance to 
export much more sugar.  The Mozambican government 
and the private sector hope to double sugar 
production by 2009 to over 500,000 tons per year. 
 
Dudley