Rio suspends Mozambique coal exports over security fears

MAPUTO Wed Jun 26, 2013 5:52pm EDT

A Rio Tinto logo is displayed on the front of a wall panel during a news conference in Sydney November 29, 2012. REUTERS/Tim Wimborne

A Rio Tinto logo is displayed on the front of a wall panel during a news conference in Sydney November 29, 2012.

Credit: Reuters/Tim Wimborne

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MAPUTO (Reuters) - Mining company Rio Tinto (RIO.L)(RIO.AX) has suspended coal shipments from northwest Mozambique after the opposition Renamo party, a former guerrilla group, threatened to disrupt the Sena railway "coal corridor" to the Indian Ocean.

Although no attacks have been reported on the line, which snakes through 600 km (375 miles) of jungle from the coal fields in Tete province to the port of Beira, gunmen killed at least two people in ambushes on main roads in the region this week.

The attacks started two days after a public declaration of hostilities by Renamo last week that raised fears of a return to civil war in the southern African nation, two decades after the end of a 16-year conflict in which one million people died.

"We have paused our operations on the rail line while we assess the current situation in Mozambique," Rio Tinto said in a statement to Reuters.

Production at the company's Benga mine was continuing, it added.

Brazilian rival Vale (VALE5.SA), which is investing $4 billion in coal mines near Tete and is the main user of the Sena line, said it was still using the track but had increased security.

"We are alert, observing the events, avoiding unnecessary exposure in zones of potential conflict and interacting with other companies looking to obtain the best information possible," Vale said in a statement.

Rio's decision is the first concrete sign of economic fallout from the campaign by Renamo, which says it has missed out on an economic boom in the last decade based on massive foreign investment in the coal sector and off-shore natural gas.

The former guerrilla movement, founded in the mid-1970s with the backing of white-ruled Rhodesia and apartheid South Africa, is demanding political reforms, including a shake-up of the election commission, as a condition for halting its attacks.

NEW ARMY CHIEF

For the last two months, Renamo and Frelimo, the formerly Marxist ruling party, have held talks about talks on political reform but made no headway.

Speaking on Tuesday, the 38th anniversary of independence from Portugal, President Armando Guebuza played down the seriousness of the violence, saying a few isolated incidents did not mean an end to peace.

"The government remains firm in its determination to find an answer to these questions through dialogue," he told reporters.

The army is already escorting convoys of vehicles on main roads in central Sofala province and foreign embassies have told tourists to avoid all but essential travel to the region, Renamo's wartime stronghold.

However, in a sign of a possible olive branch from the security forces, Army Chief of Staff General Paulino Jose Macaringue was replaced by General Graça Tomas Chongo, a general believed to have good relations with Renamo.

"He enjoys their support," said Mozambique expert Alex Vines at London's Chatham House think tank. "The government is considering its options, while seeking further talks. The dangers for both sides of miscalculation are high."

Mozambican media said passenger services had also been reduced on the Sena line, which runs past Renamo's base in the remote Gorongosa mountains, from where guerrillas launched frequent attacks on the tracks during the war.

Analysts say a slide back into the all-out conflict that crippled Mozambique in its initial years of independence is unlikely, not least because Renamo lacks the capacity for a sustained fight.

However, Renamo is thought to have as many as 1,000 men under arms with the ability to wage a limited insurgency that could damage infrastructure and unnerve investors lining up to pour billions of dollars into the energy and mining sectors.

(Additional reporting and writing by Ed Cropley; Editing by Angus MacSwan)

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