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Tom Hickey, MD, Kenmare Resources plc. Picture Conor McCabe Photography. Picture: Conor McCabe Photography.
KENMARE Resources has secured a 20-year extension of a critical agreement for the export of mineral sands from its Moma operation in Mozambique.
This ends a lengthy dispute with the Mozambique government over royalties, value-added tax (Vat), and customs-duty concessions.
Mozambique’s Council of Ministers approved the extension of Moma’s Implementation Agreement to 2044, the miner said in a stock exchange announcement on Friday.
The agreement covers the processing and export of minerals from Moma and is separate from the regulatory framework pertaining to mining operations, it said.
However, the new deal will significantly increase Kenmare’s royalties. The current 1% royalty on gross revenue will rise to 3% for the five years from 2025 to 2029, 4% from 2030 to 2034, and 5% for the remaining 10 years to 2044.
Kenmare MD Tom Hickey told investors the final terms were “a slight increase” on those previously disclosed, when royalties were expected to rise from 2.5% to a maximum of 3.5%.“But we felt it was important to get an agreement concluded,” he said.
Kenmare will also be subject to a 20% withholding tax on services provided from outside Mozambique once an amendment putting the agreement into effect is signed.
Hickey said the tax was expected to cost about $3m a year and would apply to services including marketing and consultancy, although interest costs would be exempt.
The company has also committed to invest at least $200m in plant, machinery and infrastructure over the 20-year extension, while a further $50m will go towards social projects including education, health, transport, energy, water and sanitation.
Hickey played down the additional burden of the $200m commitment.
“It’s what we’d be doing anyway,” he said, describing it largely as normal maintenance capital expenditure as well as several specific projects. He said the community spending was similarly consistent with Kenmare's current practice.
Mozambique will be entitled to buy up to 20% of Moma’s annual production for local processing. These purchases would be at market prices and generally require two years’ notice.
The agreement brings to an end years of negotiation over the Implementation Agreement, whose initial 20-year authorisation period expired in December 2024. Kenmare continued operating under the previous terms while negotiations were ongoing.
The dispute intensified earlier this year after Mozambique considered imposing terms approved by the Council of Ministers in July 2025 without Kenmare’s agreement.
Miningmx reported in April that Kenmare had itself offered to increase its royalty to 2.5% from 1% to secure an extension.
However, the government proposed raising the royalty to 3.5% by 2031 and removing Moma’s industrial free-zone status. Kenmare at the time said international arbitration remained an option.
Negotiated outcome
Kenmare still believed it had “very clear and unambiguous rights” to pursue international arbitration, said Hickey. But the company ultimately decided that pursuing arbitration in a country where the company has its only asset “would not be a smart idea”, he said. “We much preferred to have a negotiated outcome,” he added.
Kenmare has already been setting aside money for higher royalties from the beginning of 2025. Hickey said about $7.2m had been accrued at the half year based on a 2.5% royalty. That will now rise to just under $10m after adjusting the rate to 3%.
The conclusion also removes an uncertainty Hickey highlighted earlier this month, when he said Kenmare believed negotiations had reached a final position but had not yet received formal notification from the government.
At the time, he acknowledged that the original agreement had been unusually favourable to Kenmare.
Speaking on Friday, Hickey said the deal signed in 2002 had included a 1% royalty, no corporation tax, no Vat and no duties, among other benefits. “These were the terms that enabled Moma to be built,” he said. Kenmare received formal notification of the government’s approval on October 29.
The two sides must now sign an addendum, which will subsequently be submitted to Mozambique’s Administrative Court. Hickey stressed that these were administrative steps rather than another round of negotiations. “This doesn’t require any negotiation. It doesn’t reopen terms,” he said, adding that the Council of Ministers’ decision already had the force of law.
The agreement also provides for the possibility of a further 20-year extension from 2044, although that would be a negotiated renewal under the legislation in force at the time.
Mining concession
Moma’s mining concession is separate from the Implementation Agreement and runs until August 2029.
Kenmare Mozambique manager Gareth Clifton told investors the renewal provisions for the mining concession were “far clearer” than those under the Implementation Agreement.
Kenmare must give a year’s notice of its intention to renew for another 15 years. The government would then grant the extension provided the company was not in default under its mineral licensing agreement, had sufficient proven and likely reserves and had a mining plan covering the extension period.
“All of those we will be able to provide,” Clifton said.
Asked separately about Abu Dhabi-based International Resources Holdings’ approach for an all-cash takeover of Kenmare, Hickey said discussions were continuing.
“We haven’t made any disclosures of any other party being involved or interested,” he said, adding that Kenmare would have to make an announcement if another party emerged publicly.