The Mozambican government cancelled the Procana project, a major ethanol-sugar production venture in Massingir in the Gaza province in the country’s southern region, after the company failed to develop its production plans.
Autorised in 2007, the project was to develop a 30,000-hectare cane plantation to support the production of ethanol and sugar, along with by-products as input for fertilizers and generation of electricity. The total cost of the project was put at USD 500 million, and it was advertised to create close to 10,000 jobs.
A government official said that in the two years of the project the company had only cleared some 800 hectares out of the 30,000 authorised, against the company’s offers to immediately start the cane plantation, build the ethanol in 2010, and start production in 2012.
Portuguese press sources reported that minority shareholders felt deceived by the company, and they would have liked the government to intervene much earlier.
Press sources also reported on some of the corporate links around this project. In 2007, the majority stake of Procana was onwed by the Central African Mining and Exploration Company (CAMEC). Then, in 2008, CAMEC set up a separate company, Bioenergy Africa, which took control of 94 per cent of Procana; and, in 2009, the company changed its name to Sable Mining. When Bioenergy was created, sources said, CAMEC retained the ownership of the mining assets. Moreover, data showed that the company had no money to finance the ethanol project in Massingir. In the six-month interim report to September 2009, the company reported losses of USD 47.7 million, cash reserves of USD 12 million, and a sale of shares which raised another 27 million. Bioenergy/Sable therefore could not possibly find from own resources the USD 500 promised as Procana investment.
According to a spokesperson of Sable Minig/Bioenergy Africa, they had abandoned Procana last October, after issuing a statement through the London Stock Exchange saying: “Despite making progress with the development of this project (Procana), the Directors believe that the global economic climate and reduced interest in non-carbon related fuel products will make it difficult for the company to raise the necessary financing required under the Massingir Investment Agreement.” The announcement was not made in Maputo, however, and it seemed that Sable/Bioenergy Africa did not inform the government or the Mozambican shareholders of its intentions.
Further press research showed a troubled past of the Central African Mining and Exploration Company (CAMEC), which originally owned Procana. About 20 percent of CAMEC’s stake was owned by a Zimbabwean, who is banned from entering the United States or the European Union, under the sanctions against those closely associated with the Mugabe regime. The same person was deported in July 2007 from the Democratic Republic of Congo, where the main interest of CAMEC was in cobalt. The same character was wanted in South Africa on fraud and tax evasion charges dating from the 1990s. In September 2009 he went back to South Africa and agreed to pay a ZAR 40 million (USD 5.3 million) fine. CAMEC is no longer in operation: it was acquired last September, for USD 960 million, by the Eurasian Natural Resources Corporation (ENRC), a mining company with main concerns in Kazakhstan.
(With several reports from the Internet.)