Mozambique: USD 510 million investment for ethanol production

Agencia de Informacao de Mocambique (Maputo)
10 October 2007

The Mozambican government signed on 10 October a contract with the London-based Central African Mining and Exploration Company (CAMEC) for a biofuel project involving a factory that will produce 120 million litres of ethanol a year.
Signing the contract were Agriculture Minister Erasmo Muhate, and the CAMEC country manager for Mozambique, Izak Holtzhausen.
The investment envisaged is 510 million US dollars. The raw material for the ethanol will be sugar cane planted over an area of 30,000 hectares in Massingir district, in the southern province of Gaza.
In addition to producing ethanol for the domestic and regional market, the project will also produce electricity for local use, create 7,000 jobs and produce an annual income of over 40 million dollars as from 2010.
“Massingir is a district where many of its people emigrate to South Africa”, said Muhate at the signing ceremony. “I hope that with this project a city emerges, and there will be more benefits for local communities”.
For his part, Holtzhausen said that the ethanol project, known as Procana, could not have advanced to the point of signing a contract, had the Mozambican government not created a favourable environment for foreign investment.
Muhate has granted Procana provisional title to the 30,000 hectares in Massingir, valid for the next two years. CAMEC’s obligation under the contract is to demarcate the land for the sugar cane plantation, and make a start on building the ethanol factory within the next year. Complete construction of the factory, by a Brazilian contractor, is expected to take three years.
A serious problem for this project is the availability of water.
The sugar cane plantation will use water from the Massingir dam on the Elephants river, the major tributary of the Limpopo. Water used by Procana is water that does not go further down the Limpopo Valley to the irrigated rice and maize fields of Chokwe and Xai-Xai.
Farmers on the lower Limpopo have expressed concern that there will not be enough water both for Procana, and for their own needs. Calculations done by the farmers, and published last month in the weekly paper “Savana”, suggest that the vast majority of the Massingir dam’s available water will be used by Procana.
Although in theory, the dam reservoir can hold 2,500 million cubic metres of water, at the moment it is only 65 per cent full, holding 1,625 million cubic metres. Since the reserve behind the dam should never drop below 25 per cent (625 million cubic metres), that means that just 1,000 million cubic metres is available for irrigation.
The farmers say that, since Procana intends to use 950 million cubic metres, that leaves just 50 million cubic metres for all other irrigated agriculture in the Limpopo Valley. They therefore predict bankruptcy for farmers on the lower Limpopo.
Of course, exceptionally good rains would confound these gloomy predictions. But it is perhaps unwise to rely on the rains in the semi-arid climate that characterises much of southern Mozambique.
The government, however, believes that the farmers’ fears are unfounded, and that their figures are far too conservative. The press attache for the Ministry of Public Works, Joaquim Cossa, assured “Savana” that the real storage capacity at Massingir is 2,800 million cubic metres, and the dam will be able to provide water, not only for Procana, but for the entire irrigated perimeter of Chokwe, and the irrigation schemes in the Xai-Xai area.
Deputy Planning and Development Minister Victor Bernardo insisted that the government had taken all concerns into account when it authorised Procana. “These questions have been looked after”, he said. “we are in favour of development and responsible progress”.
CAMEC is best known as a mining company, exploiting copper and cobalt in the Democratic Republic of Congo. In Mozambique, CAMEC holds coal mining licenses, and has set up an agricultural trading company, DECA, in the central city of Chimoio.

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