For Mozambican tribal queen Zoria Macajo, the thatched-hut village of Capanga, nestled in the hills above the Zambezi river, has been her family’s home for generations.
For mining giant Rio Tinto, it is a headache sitting on top of one of the world’s largest untapped coal reserves, standing in the way of the company’s expansion.
Macajo, Capanga’s 59-year-old leader, is refusing to leave her home until her people are paid for their land, a contentious issue for Rio which has found it difficult to get its Mozambique business running at full speed.
“Our people have rights. The company promised it would compensate us,” Macajo said, sitting on a straw mat outside her house, the only concrete dwelling in the village where goats and pigs roam freely.
“The people must receive their money,” she said with several of the village men nodding in agreement.
Rio Tinto said it had agreed with some families a like-for-like compensation, promising houses and land in the new Mwaladzi resettlement area, about 40km from Capanga.
The company said it has paid some families affected by its operations, including the queen, and is negotiating separate payments with a farmers’ association, which it says holds formal title over some 150 hectares of land in the area.
However, Macajo said she had not received any money and the association does not represent her or others in the community.
The troubles in Mozambique for Rio Tinto are not unique. Mining companies frequently walk a tightrope between the demands of the stock market and those of local communities, demanding a larger share of profits from the resources they sit on. This often comes to a head if villages and communities have to be moved to make way for mines, creating a flash point as locals can dispute location, housing, compensation — and few have official documents to prove their rights in the first place. Often, those being moved run small-scale mining operations and are reluctant to be evicted.
Macajo said her community was prepared to aggressively defend their village against Rio Tinto, threatening a repeat of violent protests that broke out in January last year when 700 families took to the streets over living conditions and lack of fertile farming land in a resettlement built by Brazilian miner Vale.
Rio Tinto, Vale and dozens of other mining companies have flocked to the region since 2004, hoping to secure some of the 23 billion tonnes of coal estimated to lie beneath the war-scarred state, especially with supplies of quality coking coal scarce and global demand growing.
However, developing mines in the former Portuguese colony has proven more difficult than initially imagined, with shoddy railways and ports, depressed coal prices and frustrated communities cooling the coal bonanza.
For Rio Tinto, the stakes are high in Mozambique, where it wrote US$3 billion off the value of its coal assets earlier this year, in a hit that ultimately ousted its chief executive officer.
Making a success of Mozambique where his predecessors failed would be a major success for incoming boss Sam Walsh. The company has said it is reviewing its coal assets in the country, but Walsh has also said the project is not currently for sale.
Rio’s write down on its Mozambican assets was largely due to difficulties in transporting the coal from pit to port, but the community’s resistance may place further hurdles in its plan to expand its Benga mine, one of the assets the firm inherited when it bought explorer Riversdale two years ago.