Mozambique Violence Signals Short-Term Threat to Energy Boom

Photographer: Carlos Litulo/AFP via Getty Images

Renamo leader Afonso Dhlakama’s electoral support dropped to 16.4 percent in 2009 from 47.7 percent a decade before. Close

Renamo leader Afonso Dhlakama’s electoral support dropped to 16.4 percent in 2009 from... Read More

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Photographer: Carlos Litulo/AFP via Getty Images

Renamo leader Afonso Dhlakama’s electoral support dropped to 16.4 percent in 2009 from 47.7 percent a decade before.

Mozambican army clashes with former rebels may disrupt coal shipments and public transportation without heralding a return to civil war, said analysts such as Alex Vine, head of the African program at Chatham House.

The Mozambique National Resistance, known as Renamo, said it was ending the 21-year-old peace agreement with the southern African nation’s ruling party after army troops captured its headquarters in the Gorongosa mountains on Oct. 21. The action followed Renamo attacks on arms depots and buses this year that killed several people and forced the closing of rail lines used by coal mines owned by Rio Tinto Plc. (RIO)

“The markets are concerned -- adds additional risk for lenders and could make it more difficult for Mozambique to raise funds for infrastructure if this drags on,” London-based Vines said yesterday in an e-mailed response to questions. “The coal mining companies have also seen their costs rise.”

Renamo fought a 17-year civil war against the ruling Front for the Liberation of Mozambique, or Frelimo, until signing a peace agreement in Rome in 1992. It has served as the main opposition party for two decades without threatening Frelimo’s hold on the presidency and parliament. Renamo leader Afonso Dhlakama’s electoral support dropped to 16.4 percent in 2009 from 47.7 percent a decade before.

“The leadership of Renamo is making a last-minute desperate attempt to get concessions from the Frelimo government,” Robert Besseling, senior Africa Analyst at IHS Country Risk, said in phone interview from Johannesburg. “They know that this is the end for them.”

Economic Growth

Fueled by transportation, communications, the world’s largest discovery of natural gas in the past decade and coal mining operations run by Rio Tinto and Vale SA (VALE5), Mozambique’s $15 billion economy is expected to expand 7.4 percent this year, according to government forecasts.

The former Portuguese colony plans to open a liquefied natural gas terminal in 2018 that will be the second-largest export site in the world after Ras Laffan in Qatar. Anadarko Petroleum Corp. (APC) and Eni SpA (ENI) are among companies investing in gas production in the country.

“The primary risk to gas development will be elevated risk perceptions,” Mark Rosenberg, an Africa analyst for New York-based Eurasia Group, said in an e-mailed response to questions. “Given the geography of the nascent gas infrastructure and that Renamo cannot sustain a wide-ranging or prolonged insurgency, physical risks from recent events are quite low.”

Renamo Strongholds

U.S. State Department deputy spokeswoman Marie Harf yesterday called on both sides to “take steps to move back from the brink.” United Nations Secretary-General Ban Ki-moon urged Renamo and Frelimo “to fully engage in an inclusive dialogue” to ensure “the country continues to achieve social inclusion and sustainable development for all,” according to a statement issued by his office.

Pursued by the army, Dhlakama is now holed up in the central province of Sofala, close to his bush strongholds during the civil war. Support from the former white-minority governments in Rhodesia, now Zimbabwe, and South Africa that backed Renamo during the conflict has ended.

“It’s only in a very small area of Mozambique where Renamo still has a presence and a fighting capability,” Besseling said. “It does not have the capability to stage large-scale attacks on the military.”

Government Dialogue

Dhlakama is ready for talks with Frelimo and believes the government must “show signs of detente” so that he can appear in public, Lourenco do Rosario, rector of the Politechnic University of Mozambique, said yesterday in an interview after meeting with a Renamo delegation in the capital, Maputo.

He’s criticized President Armando Guebuza’s government for allegedly politicizing state offices and for setting up an electoral system that favors Frelimo.

With general elections set for October next year, there’s no indication that Frelimo is prepared to make concessions.

“Serious gas players will expect a certain amount of political jockeying around resources in the run-up to local and then national elections,” John Smelcer, director of Africa Mining & Energy Projects at the Johannesburg-based law firm, Webber Wentzel, said yesterday in an e-mailed response to questions from Maputo. “They also likely understand that Renamo is no longer capable of projecting a serious threat across the country.”

To contact the reporters on this story: Franz Wild in Johannesburg at fwild@bloomberg.net; Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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