Kenmare Resources and the Mozambican government have reached a definitive agreement on the operating conditions for the Moma heavy mineral sands mine, located in the Larde district of Nampula province, bringing to a close a dispute of nearly three years over fiscal and social obligations.

The Ministry of Mineral Resources and Energy (MIREME) disclosed the development through a communiqué confirming the signing of a new arrangement designed to regularise the relationship between the state and the mining company.

According to a report published on Monday (19) by the Jornal Notícias, MIREME confirmed the signing of a definitive agreement that replaces the previous contractual instrument and establishes new conditions for the company’s operations in the country.

The agreement provides for changes to the royalty payment regime, increased contributions to local development, and commitments related to the retention of jobs and the use of renewable energy. One of the principal terms establishes a progressive increase in the royalty rate, from 3% to a maximum of 5%, depending on the evolution of international prices for ilmenite, one of the key minerals extracted and exported by Kenmare.

The new framework also provides for the channelling of 10% of tax revenues from the mine into the Nampula Local Development Fund, with estimated annual receipts of between US$8 million and US$10 million. The funds are to be administered at the provincial level and subject to oversight by the Administrative Court, with the aim of strengthening the economic and social benefits of extractive activity for local communities.

Kenmare has committed to completing, by 2027, the construction of a 15-megawatt solar power plant.

On the labour front, Kenmare is reported to have committed to retaining its 1,682 workers, of whom 96% are Mozambican nationals, ensuring the continuity of employment associated with the mining operations. The company has also pledged to complete, by 2027, the construction of a solar power plant with a capacity of 15 megawatts, intended to reduce the mine’s dependence on diesel and improve its energy efficiency.

The dispute between the government and Kenmare intensified over disagreements regarding the taxation of mining operations and the conditions for renewing the agreement governing mineral processing and export activities. In March, the mining company acknowledged the possibility of pursuing international arbitration after contesting the Tax Authority’s attempt to apply new fiscal conditions before the conclusion of negotiations.

At the time, the government rejected the existence of a formal conflict and maintained that discussions were aimed at securing a more balanced distribution of the benefits arising from the exploitation of national mineral resources. Community development concerns also featured prominently in the issues surrounding the company’s operations, with the communities of Topuito and Pilivili expressing dissatisfaction over the fulfilment of social investment commitments.

According to the report, only 42% of the US$12 million earmarked for the Community Development Fund had been applied to the construction of schools and water supply systems.

In its third-quarter production report, published on 15 October, Kenmare had still regarded the renewal of the implementation agreement as a priority, indicating that negotiations with the government remained ongoing. The company stated at the time that it intended to reach a negotiated solution in the near term, while keeping the Moma mine operating under the terms of the previous contractual conditions.