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January 04, 2010

Mozambique cancels biofuels contract with foreign investor

Mozambique's government has voided a 2007 contract with Procana to begin ethanol production from sugar.

Agencia Informacao Mocambique reported December 30 that the renewable-fuel project centered on a proposed 30,000 hectare sugar plantation at Massingir, in the country's southern Gaza province.

Procana's initial investor was the London-based Central African Mining and Exploration Co., which in August established Bioenergy Africa, which received 94 percent of Procana's shares. Bioenergy subsequently renamed itself Sable Mining and is registered in the Caribbean's British Virgin Islands.

According to the contract, Procana was to have invested more than $500 million in the project, which was to have been the first major biofuels project to come on-stream in Mozambique. The Massingir factory was slated to produce both sugar and ethanol, with the byproducts being recycled to produce both fertilizer and generate electricity.

According to Deputy Education Minister Luis Covane, the contract was voided because Procana failed to comply with its contractual obligations, telling journalists, "In the two years since the provisional authorization in 2007, only 800 hectares of land was cleared. The company made no use at all of the remaining 29,200 hectares."


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