For ten years, Montepuez Ruby Mining (MRM) has been mining rubies in the Namanhumbir, Montepuez district, south of Cabo Delgado province. The first years of exploration in that locality were marked by confrontations involving the company and the illegal miners. However, in recent years, the scenario has changed and tranquility has returned to the area. já reigns at that point although there are still small pockets of mining.
In commemoration of these years in the Mozambican market, MRM makes a brief assessment of its presence and its contribution to the economy of the province of Cabo Delgado.
MRM has been operating in the Mozambican market for 10 years. What has been the contribution of Montepuez Ruby Mining to the economy of Cabo Delgado?
MRM's contribution is very important to the economy of the Montepuez district and the entire province. MRM is the largest ruby mine in the world, accounting for 60% of the world's ruby production, and according to Gemfields' financials, over the last five years, 30% of MRM's revenues have gone to the Mozambican government in the form of mineral royalties and taxes.
Since its first ruby auction in 2014, MRM has sold a total of 13.6 million carats of raw rubies and generated $643 million in total revenue across 14 auctions (the most recent of which concluded in April 2021). Gemfields' proprietary grading system offers Mozambique raw rubies surgically graded over 500 grades by color, size and clarity.
MRM has been the number one contributor in Cabo Delgado province in every year from 2014 to 2019, despite the presence of the large gas projects. Results for 2020 are not yet available.
How much has the company invested over this period. And what were the areas of investment?
Gemfields has invested considerable resources ($90 million of capital expenditures to date) in developing the deposit and building state-of-the-art mining operations.
To what extent is the pandemic affecting MRM especially in production and revenue?
MRM generated $122 million in revenue from ruby auctions in 2019. In 2020, as a result of the pandemic, MRM saw zero revenue. The mine was suspended from April 2020 to March 2021.
Fortunately, MRM managed to get through that period without laying off any of its staff, meaning that jobs were preserved, due to the financial support provided by the majority shareholder, Gemfields Limited, which owns 75% of MRM in partnership with Mwiriti, the Mozambican company, which owns 25%.
We were able to resume mining from mid-March 2021 and it is now fully operational.
The widespread quarantine, travel and restrictions stemming from Covid-19 have had a serious impact on Gemfields' ability to hold gemstone auctions in their regular format.
How well has MRM been able to reinvent itself to turn the scenario around?
In response to various quarantines, travel, and pandemic restrictions, we have introduced an "Adapted Auction Model" that incorporates a series of sequential mini-bids, where bids are placed on line after tenders are held in various cities, in person previews of the gems.
Gemfields has been greatly encouraged by the strong appetite of its customers and the realized prices and success of its mini-cities, deploying new bidding on an online platform, which provides important flexibility and support for this year and beyond. MRM