SAMORA MACHEL JR.

Mozambique 2020 | MINING & ENERGY | VIP INTERVIEW

TBY talks to Samora Machel Jr., Chairman of Montepuez Ruby Mining (MRM), on sustainability in Mozambique, ruby extraction operations, and the deleterious effects of COVID-19.

In what terms would you describe MRM's commitment to development and sustainability in Mozambique?

MRM operates the Montepuez ruby deposit in Cabo Delgado. It is 75% owned by Gemfields and 25% by Mozambican company Mwiriti. Covering approximately 33,600ha, it is believed to be the most significant recently discovered ruby deposit in the world. MRM believes rubies belong to Mozambique and that we must structure the gemstone industry to maximize profits generated by the country's resources, while ensuring we bring in the maximum amount of money into the country. MRM aspires to be the guardian of Mozambique's rubies, operating them responsibly, transparently, and ethically, involving the government in all processes, all while contributing positively to the national economy and taking a leading role in modernizing the colored gemstone sector and building sustainable livelihoods for our communities. Since the beginning of our operation, MRM has invested a total of USD241 million as part of our commitment to CSR and the development of Mozambique. Part of this investment went toward community development projects, establishing schools with a combined capacity of 2,000 students, funding the vocational training of 2,100 local youths, providing two mobile clinics that supply medical services to 10 local communities, and supporting farming associations for 400 farmers in local communities. We also support biodiversity conservation in Quirimbas National Park and the Niassa National Reserve. We have also committed USD7 million to the development of the RAP village (resettlement of 105 families from Nthoro village) to limit as much as possible the negative consequences of our project. RAP is our priority project and will be completed as scheduled, although the handover might be delayed by a month to July 2020 due to the COVID-19 pandemic. With the recent health pandemic, the company has focused on the implementation of health programs with a structured approach focus on mental health to address health issues likely to cause anxiety and stress for our employees and their families. A hygiene and illness prevention program encourages taking primary measures of disease prevention to protect ourselves and others from becoming ill and defining infection-control methods to prevent the spread of contagious diseases in our camp accommodations.




In what way do rubies extracted in Mozambique stand out on the global scale?

The discovery of rubies in Mozambique in 2009 was a real gamechanger. Rubies from different origins often have distinctive hues, but Mozambican rubies were formed about 500 million years ago and span all known color ranges, including the rarest pure fluorescent reds. Mozambique has fast become the world's number-one ruby exporter, yielding record-breaking auction results for Gemfields. Following US-led bans on rubies from Myanmar in 2008, Mozambique's consistency and transparency of supply has instilled renewed confidence in rubies and enabled high-end jewelry brands to create extraordinary capsule collections with fine rubies they would typically have spent years collecting.

After a few years of increased stability, MRM witnessed episodes of disorders and illegal mining in February 2020. What role can MRM play in mitigating the social tensions that trigger such events?

In 2020, MRM has been increasingly invaded by illegal miners, sometimes culminating in fatalities, due to the collapse of the pits where they illegally conduct mining activity. MRM continues to work closely with Mozambican authorities to raise awareness among local communities of the dangers of artisanal mining and to assist in tackling ruby smuggling and reduce the risk to, and exploitation of, vulnerable groups by well-organized syndicates. MRM has undertaken steps to reduce the amount of illegal mining activity, by providing humanitarian assistance in rescue and recovery operations and committing to immediately report any accident to all stakeholders at both district, provincial and national levels. We have increased on-site signage warning of the dangers of illegal mining and campaigned to raise awareness among the local communities and government officials to assist in tackling the issue.

How will your strategy be affected by the current COVID-19 crisis?

The current COVID-19 pandemic will undoubtedly affect MRM's financial performance in 2020. Due to widespread travel restrictions, the mixed quality auction scheduled for June 2020 is likely to be rescheduled, which may result in one single auction in 4Q2020. All but critical operations at MRM have been suspended as April 22. The well-being of MRM's employees and communities remains the overriding priority. Security, maintenance, and other essential services will continue in order to ensure MRM is well placed to resume normal operations as soon as it is safe and practicable to do so. MRM has also suspended all expansionary capital expenditure for the foreseeable future, including the second treatment plant with an estimated expenditure of USD12 million.

What are your objectives for 2020?

Without factoring in the COVID-19 pandemic, MRM'S objectives for 2020 are to increase carat production from 2,260.7kcts in 2019 to 5,400kcts in 2020, participate in more auctions, and increase our staff members to 709 by December 2020. Our long-term vision is to be the global leader in precious colored gemstones, promoting transparency, trust, and responsible mining practices. Our approach has always been progressive and unconventional. We are a young, dynamic company and support raw emerging talent. We seek to do things differently and maintain a considered balance between people, profit, and the environment.