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Lessons from this project are important for the much larger investments yet to come in Mozambique.
The Kenmare Group Two subsidiaries in Mauritius: Kenmare Moma Mining Limited and Kenmare Moma Processing Limited These are the two companies actually running the mine in Moma. As the name suggests, one does the mining (Moma Mining) and one does the processing and exports (Moma Processing). The two companies operate as branches in Mozambique, and Moma Processing exports minerals to third parties across the world. In Mozambique, the local branch of Moma Processing is registered in an industrial free zone. (see box ”Kenmare’s fiscal benefits” for more details on the tax regime of these subsidiaries) Why operations from Mauritius? Kenmare was originally registered in Ireland and Jersey. However, it received finances from the African Development Bank on the condition that it registered in Africa. Rather than registering directly in Mozambique, it chose the tax haven of Mauritius. The use of a foreign-owned branch rather than a local subsidiary can also have tax benefits, although the company says the move was to reduce registration costs One subsidiary in Northern Ireland: Kenmare UK Company Limited This is a completely dormant company with no function. One subsidiary in Ireland: Kenmare Minerals Company Limited The company carries out small-scale exploration in Ireland, investments of around US$40-50.000 annually. Exploration has never led to any findings. However, since the company group is registered in Ireland, this subsidiary undertakes minor operations “for regulatory reasons”. Four subsidiaries in Jersey: Kenmare C.l. Limited, Congolone Heavy
The Kenmare Group Ireland Kenmare Minerals Company Limited Mauritius Kenmare Moma Mining imited Kenmare Moma Processing Limited
Jersey Kenmare C.l. Limited Congolone Heavy Minerals Limited
Northern Ireland Kenmare UK Company Limited
Kenmare Graphite Company Limited Mozambique Minerals Limited
Minerals Limited, Kenmare Graphite Company Limited and Mozambique Minerals Limited Two of the companies are ‘dormant’, meaning that they currently have no activity. According to Kenmare management they might however give some tax benefits to the company group if revived in the future.
• Mozambique Minerals Ltd was
previously involved in a gold project in Mozambique, but activities are currently on hold. The Kenmare Maputo office is registered under the name Mozambique Minerals Ltd.
• Kenmare Graphite Company Ltd
developed and operated the Ancuabe Graphite Mine in Mozambique, but operations were stopped due to high costs. In 2012 a public tender resulted in the German multinational Graphit Kropfmuhl being selected to operate the mine.
• Congolone Heavy Minerals Ltd was set up to run the Moma mine. AfDB was
Mining without development: the case of Kenmare Moma Mine in Mozambique
willing to invest in the Moma mine on the condition that the company was registered in Africa. Hence Kenmare set up the two Mauritius based subsidiaries and transferred all rights from Conglone Heavy Minerals.
• One of the Jersey registered
subsidiaries, Kenmare C.I. Ltd, is there for management purposes. The Kenmare Group transfers profits from the two companies operating in Mozambique (Moma Mining and Moma Processing) to the Jersey based subsidiary. According to Kenmare, sending the profits to the subsidiary in Jersey allows the Kenmare Group to pay dividends or reinvest in the expansion of the mine without paying taxes. Until now, profits have been reinvested in the expansion of the mine.
Source: Kenmare Annual Report and Accounts 2011 and 2012, and interview with Kenmare management.