Mozambique ruby mining giant hit by virus

The operator of the world`s largest ruby mine said Thursday that its financial performance will be hard hit by the coronavirus which has forced it to stop production.

Mozambique`s Montepuez Ruby Mining said it halted all but vital operations at the mine in the restive province of Cabo Delgado at the end of April because of supply chain restrictions and fears of an outbreak among staff.

Montepuez Ruby Mining (MRM), a subsidiary of London-based Gemfields, generated around $584 million in revenue between 2013 and 2019 – the highest in the southern African country, which produces 40 percent of the world`s rubies.

“The Covid-19 pandemic will have a serious and adverse effect on MRM`s financial performance in 2020,” the company said on Wednesday.

It said an auction of the precious red gemstones scheduled this month had been cancelled due to widespread travel restrictions.

“It is hoped that MRM will be able to host at least one auction before the end of 2020. The impact on ruby prices is also not yet known.”

MRM is among 14 mining companies to have suspended their activities in Mozambique as a result of coronavirus, according to the head of the industry`s regulator, Adriano Senveno.

About 4,000 people have been left out of work as a result.

To date the Mozambique has recorded 788 coronavirus cases, including five deaths. None of MRM`s staff have contracted Covid-19 so far, according to the company.

MRM is 75-percent owned by Gemfields and the rest by Mwiriti Limitada, a Mozambican company co-owned by army General Raimundo Pachinuapa – a senior member of the ruling Frelimo party.

In 2011 it won mining rights to 34,000 hectares of ruby-rich land in the northeastern province of Cabo Delgado, which has since fallen prey to a local jihadist insurgency.

Last year Gemfields agreed to pay 6.7 million euros in compensation to nearly 300 artisanal miners over allegations of abuse around a ruby mine.

The company was accused of hiring police and private security officials who were involved in the alleged property destruction, torture and death of some residents in the company`s concession area to force them to leave.

Gemfields denied any wrongdoing but said it “recognised that, in the past, instances of violence have occurred on and around the MRM licence area”.