The extractive industries sector in Mozambique should involve stronger economic linkages, transparency and dialogue, according to a recent report by a local research institute, Instituto de Estudos Sociais e Económicos (IESE). The report's findings were presented in early February at the "Alternative" Mining Indaba, a fringe event that took place in tandem with the Mining Indaba, an international mining conference held in Cape Town, South Africa. The IESE's paper provides a useful commentary on the need for transparency and assessing the benefits from extractive industries in Mozambique, which are growing rapidly.

Although a valuable resource for developing countries, extractive industries also carry risks, as they provide governments with easy revenue streams and are correlated with increasing corruption and deteriorating governance quality. Strong systems that promote transparency, published tax payments by foreign companies, active civil society and effective domestic regulation and oversight are the principle means of addressing these risks. Mozambique is committed to ensuring such safeguards are in place as part of its candidacy to join an international scheme to boost transparency in the mining sectors of developing countries, the Extractive Industries Transparency Initiative (EITI). The deadline for Mozambique's validation as a member of the EITI is May 14th 2011.

Minerals mined in Mozambique include both base and precious metals, forest products and natural gas. Hopes are high that oil may also be present, and exploration is ongoing. Minerals projects are typically capital intensive. For example, the Pande gas project operated by Sasol of South Africa, the Moma mineral sands project run by the UK-based Kenmare and the Tete coal project of Brazilian mining giant have capital:jobs ratios of around US$1m:1. The sector also has few linkages to the broader economy in local supply, processing or end use by other industries, and almost all output is exported. Local tax revenues from these projects are relatively low (February 2011, Economic policy), while social offset funds, which are typically included as a condition of winning mining concessions, are underdeveloped and often have weak community participation. As the report notes, such shortcomings are primarily the responsibility of the Mozambican government, not the corporations concerned, although they no doubt welcome lenient fiscal treatment.