Since the discovery of rich ruby deposits in Cabo Delgado in 2009, Mozambique has grown to become a crucial supplier in the global gemstone market, responsible for around 50% of the world’s ruby supply. The Montepuez district, in particular, is a key area for ruby extraction due to its relatively shallow deposits, which simplify mining operations compared to other regions. The region has attracted international companies like Fura Gems Inc. (FG), Gemfields, and Gemrock, which have actively secured mining licenses to tap into these lucrative resources.
Fura Gems Inc: Expansion Strategy and Key Players
Fura Gems Inc. (FG) is a Canadian gemstone company founded in 2006, initially known as Ferro Iron Ore Corp and later renamed to reflect its focus on the gemstone sector. FG’s operations in Mozambique commenced in 2017, with significant expansions through acquisitions from other players like Regius Resources and New Energy Minerals. By 2020, FG held over 39,000 hectares in ruby mining licenses, with further expansions pending for a total of 65,478 hectares.
FG’s key executives include:
- Dev Shetty (President and CEO): Formerly the COO of Gemfields, Shetty’s expertise in the gemstone industry has shaped FG’s aggressive expansion strategy in Mozambique.
- Ashim Roy (Vice President of Operations): Previously a manager at Gemfields, Roy now oversees FG’s operational activities, focusing on exploration and extraction in Cabo Delgado.
- Rupak Sen (Vice President of Marketing and Sales): Formerly the global marketing director for Gemfields, Sen is responsible for FG’s market positioning and sales strategies.
- Rahul Gopal (Director of Security and Risk Control): Gopal’s experience as the head of security for Gemfields’ ruby operations has informed FG’s approach to managing local security concerns in Mozambique.
Affiliated Companies and Local Stakeholders
FG operates in Mozambique through a network of subsidiaries, as required by local law, which mandates foreign companies to engage through local entities. Key affiliated companies include:
- Moon Mining SA: Holds License 4392 L, covering 17,506 hectares.
- Macassar Resources Lda: Manages License 6811 L, an active exploration site of 6,234 hectares. Macassar was initially founded by Ana Rita Jeremias Sithole, a member of FRELIMO and a deputy in the Mozambican Parliament, reflecting the strong political ties involved in FG’s local operations.
- CCFM-Minerais SA: Holds permits for License 3869 L and License 9903 C, a 10,041-hectare concession in the Montepuez area, currently pending assignment.
- Mozambican Ruby Lda: A crucial entity in FG’s portfolio, holding the pending concession 10267 C.
Additionally, FG has structured its ownership through Dubai-based entities like Cobadale Limited and Fura Services DMCC, which hold majority stakes in the Mozambican subsidiaries. Cobadale Limited, led by Indivar Pathak—a close adviser to Stan Bharti, the head of Forbes & Manhattan, which played a significant role in FG’s early strategic direction—demonstrates the deep international connections in FG’s corporate structure.
Political Entanglements and Influence
FG’s entry into Mozambique’s ruby sector has involved navigating a landscape of intricate political affiliations. One example is the involvement of Ana Rita Jeremias Sithole, who was a shareholder in Macassar Resources Lda until 2017, when FG acquired a majority stake through its Dubai-based intermediary, Cobadale Limited. Such ties to FRELIMO, the ruling party, provide FG with a degree of stability and local support, but they also embed the company within a political environment that is characterized by shifting allegiances and potential risks of policy changes.
The acquisition of assets from Regius Resources and New Energy Minerals further illustrates the political complexity of FG’s operations. These deals involved multiple licenses and concessions linked to local political figures, requiring careful negotiation and compliance with Mozambican regulations. FG’s relationship with politically exposed persons (PEPs) like Felício Zacarias—a former public works minister and key player in the Mozambican mining industry—has been instrumental in navigating local challenges but presents a risk if the political environment shifts.
FG Licences and Concessions Map
Security Risks: Insurgency and Regional Instability
Operating in Cabo Delgado comes with significant security challenges, particularly due to the rise of Islamist insurgent groups like Ansar al-Sunna and Islamic State affiliates. While the Montepuez district has not been a direct target of these groups, the broader instability in Cabo Delgado, marked by frequent attacks in the northern regions, creates a volatile environment that could impact FG’s operations.
FG has also faced challenges in managing local tensions with artisanal miners, who have been active in the region long before the arrival of multinational companies. Artisanal miners, often displaced by formal operations, perceive foreign firms as exploitative, leading to occasional clashes. While FG has not been directly implicated in the human rights abuses that led to a lawsuit against Gemfields, the overlap in operational areas and the involvement of former Gemfields staff in FG’s management could draw similar scrutiny as the company scales up its activities.
Operational and Financial Challenges
The global COVID-19 pandemic temporarily paused FG’s operations in Mozambique in early 2020, illustrating the susceptibility of mining activities to external disruptions. Although activities have since resumed, these delays have impacted FG’s financial timelines and could hinder its projected cash flow. FG’s current financial structure shows a significant investment in exploration, with profitability projections hinging on successful extraction and favorable market conditions.
According to a 2019 analysis by Hannam & Partners, FG’s ruby business was projected to achieve steady production levels of just under 10 million carats, potentially generating around $52 million in annual cash flow once operations reach full scale. However, the delays and complexities of operating in Mozambique, combined with fluctuating market conditions, make this a challenging target. Furthermore, FG’s reliance on debt and equity to fund acquisitions—such as the purchase of SLR Mining Lda’s assets—exposes the company to financial risks if operational setbacks continue.
Special thanks to the team at Assettracing.com for their valuable input in research capacities, advice, and support with resources in preparing these articles.
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