Mozambique: Investment Opportunities

March, 2015

Brazilian Mission to Mozambique

1 Contents

Section Page

1. STANDARD BANK GROUP

2. Standard Bank Mozambique

3. Gas & Coal Investment Opportunities in Mozambique

4. Power Projects in Mozambique

5. Doing Business in Mozambique

Why Standard Bank

Established banks and specialist expertise in key centres in Africa

– Understanding of the dynamics of local markets

– Deep knowledge of the applicable laws and regulations

– Strong relationships with governments, regulators and key players in key sectors

Strong financials with supporting credit ratings

– Largest banking group in Africa by assets – over ZAR1,701 billion (approx USD171 billion) as at

June 2013

– Headline earnings ZAR8,149 million (USD 884 million) (June 2013) ZAR15 billion for full year 2012

(December 2012)

– Tier 1 Capital Adequacy ratio 12.3% (June 2013 based on Basel III)

– Credit ratings matched to sovereign ratings

► Fitch – BBB

► Moody’s – Baa1

► Standard & Poor’s – BBB

Solid pan-African treasury capability

– Leading investment bank

– Global Markets dealers in 18 countries and settlement capabilities in another 22 countries

– Technology and systems to work with regional treasury set-ups

– Domestic transactional banking in 18 countries

– Regional custody

Partner with an African bank – one born and bred in Africa

Best investment

bank in Africa –

Euromoney 2013

Best treasury

services in Africa

– EMEA Finance

2013, 2012, 2011,

2010

Most innovative

investment bank

from Africa – The

Banker 2012

Africa deal of the

year (Umeme IPO)

– African Banker

2013

Ranked in the top

10 of South

African giants –

FM Top

Companies 2013

Most valuable

banking brand in

Africa – The

Banker 2013, 2012,

2011

They call it Africa. We call it home.

4 Contents

Section Page

1. Standard Bank Group

2 STANDARD BANK MOZAMBIQUE

2.1 Standard Bank Presence in Mozambique

2.2 Corporate and Investment Banking

2.3 Transactional Products and Services

2.4 Global Markets Africa capabilities

2.5 Investment Banking

3. Mozambique Macroeconomic Development

4. Gas & Coal Investment Opportunities in Mozambique

5 Power Projects in Mozambique

6. Doing Business in Mozambique

Standard Bank Presence in Mozambique

Standard Bank has been operating in Mozambique for

over 120 years and is regarded as one of the local market

leaders.

It is the most liquid, solvent and efficient banking

institution within the Mozambican financial system.

It has significant experience in all areas of the banking

activity and is well placed to provide quality services.

It is one of the tree banks with a very strong market

position, Standard Bank Mozambique (SBM) is the

biggest non- Portuguese bank in the market.

Standard bank Mozambique is complaint with BASEL III

requirements, beside not being yet forcible in the market

At present has a network of 38 branches throughout the

country, with 19 branches in the south, 9 in centre and 10

in the northern region

Presently employs over 1,000 people through out the

country.

As per 31 December 2013 results, SBM has total assets

exceeding US$1.47billion; profit reached USD41mio; and

a ROE of 21%, highest in the local market.

In 2013, the Bank delivered a strong performance where

the quality of assets remained exceptionally good

Standard Bank SA is a universal bank, which renders

financial services to corporate and private clients in the

following areas

Corporate and Investment Banking

– With regional representation across the country

(south, centre and north)

Personal and Business Banking

– Currently expanding our branch network into rural

areas

– Increasing number of ATMs across the network

A long-standing commitment

Key numbers

Activities

Client Coverage

Client engagement and service is central

Client service teams with specialists across

disciplines

One point of contact with the bank – Client

co-ordinator

– Provides access to the products and

services across the bank

– Pan-African relationships managed

through central relationship manager,

supported by in-country relationship

managers

Client service supported by product specialists:

– Transactional bankers & service advisors

– Trade sales managers

– Global markets sales managers & dealers

– Investment banking coverage & senior

bankers

Client service desks

– High first-time resolution and escalation

procedures

Using our insights

based on our

location,

legitimacy,

reputation and our

deep industry

knowledge, we

can develop

meaningful and

relevant client

relationships.

This allows us to

provide you with

appropriate

products and

services to help

deliver your

strategy.

Transactional Products and Services

Banking you throughout your working capital cycle

Access to in-country clearing in

presence countries

Electronic third party payments

(telegraphic transfers, Real Time

Gross Settlement, domestic

electronic funds transfer, inter-

account transfers, MT101, MT103)

Bulk payments

Online or integrated payments,

with access and authorisation

controls

Card payments

Cash distribution

Mobile payments

Payment reporting

Electronic collection

(direct debits*, telegraphic

transfers, electronic funds

transfer)

Cash Collection

(branch, cash centre, on-site)

AutoSafe*

Cash-in-transit

Cheque collection

Bill presentment*

Receipt referencing*

Card acquiring*

Current, demand and fixed

deposit accounts (LCY

and FCY)

Overdraft & short term

credit facilities

Electronic banking, online

or integrated

Pan Africa view of

balances*

Notional pooling*

Domestic and regional*

cash concentration

Zero and target balance

funds sweeping*

FX hedging, forwards,

swaps, options

Letters of Credit

(issuance and

confirmations)

Guarantees (issuance

and confirmations)

Balances and

statements (online,

integrated or Swift)

So

luti

on

s

Cli

en

t’s N

ee

ds

Collections

Access to extensive

branch network

Management of physical

cash onsite

Local knowledge

Liquidity

Management

Managing trapped

cash

Interest maximisation

Cash consolidation

Account

Management

Account Structuring,

Oversight & Access

Risk Management

Information

Management

Control over

documentation

Payments

Access to online banking &

Swift

Control over disbursements

Access to local clearing

Cross border fund flow

regulation

Understand settlement

processes

Standard payment formats

Counterparty Risk

Trade Risk

Currency Risk

Collections Account

Management Risk Management

Liquidity

Management Information

Management

Payments

Domestic current

accounts (LCY & FCY,

resident & non-resident)*

Access to local clearing

for electronic credits

* Where applicable

Spots, forwards, options and non-deliverable forwards Foreign Exchange

Precious and base metals, energy, carbon, coal and cobalt (physical trades and derivatives) Commodities

To facilitate the increasing appetite for African risk, Standard Bank underwrites sovereign and corporate Eurobonds as well as corporate bonds and credit-linked notes.

Credit

Repos, bonds, forward rate agreements and interest rate and cross-currency swaps are available.

Interest Rates

Africa cash equities are offered through brokerage houses in Nigeria, South Africa and Kenya, while London provides you access to multiple African equity markets.

Equities

Our money markets desk gives you access to commercial paper and treasury bills. Money Markets

Global Markets Africa capabilities

Global Markets provides financial risk management across the continent:

Full range of onshore services in 18 countries (light blue on map)

Settlement in an additional 22 countries (dark blue on map)

Ability to provide foreign exchange pricing in 40 of the 54 countries

Supported by:

Our on-the-ground experts operate 26 dealing rooms across the globe, of which 22 are based in

Africa (5 in South Africa), providing specialist knowledge of their local markets

Partnering with you in managing financial risks

Global Markets

Africa builds

basket solutions

using all asset /

risk classes, as

well as structured

products to meet

your needs

Key

Full range of services

Settlement

Investment Banking

Capital Markets

Mergers and

acquisitions

Corporate

restructurings

Power and

Infrastructure advisory

Initial public offerings

Capital raisings

Leveraged buy-outs

Valuations

Structured Debt

Book building

Hybrid instruments

Investment grade and

high yield

instruments

Equity and equity-

linked instruments

Structured equity

Investment Banking

Advisory

Debt arranging

Financial structuring,

underwriting and

lending

Tailored lending

Instruments

Optimising capital

structure

Strategic Investments &

Special Situations

BEE strategic

investments

Infrastructure equity

Special situations

Mergers & acquisitions

Power & infrastructure

Debt capital markets

Securitisation

Equity capital markets

Products

Strategic equity

investments

Infrastructure finance

Special situations

Structured finance

Structured trade &

commodity finance

Diversified lending &

leverage

Mining, energy &

infrastructure lending

Mining and

Metals

Power &

Infrastructure Oil & Gas

Diversified

Industrials Telecoms

Delivering optimal balance sheet solutions

First ever publicly

listed project bond

issued to finance a

solar power plant

based on CPV

technology

First ever

benchmark sized

private placement

transaction by a

sub-Saharan

sovereign

The first Ugandan

listing by

introduction into

Kenya

First non-

extractive limited

recourse financed

by a Chinese bank

in sub-Saharan

Africa with no

government

guarantee

Recent innovations

10 Contents

Section Page

1. Standard Bank Group

2 Standard Bank Mozambique

3. GAS & COAL INVESTMENT OPPORTUNITIES IN MOZAMBIQUE

4. Power Projects in Mozambique

5. Doing Business in Mozambique

11

Coal Mining and Infrastructure Overview

Production could reach 70 mtpa by 2020

25 billion tonnes reserves

Approx 6 million tonnes produced (2013)

Vale is the leading producer and

exporter

One railway (Sena) and port (Beira)

operating

Logistics capacity should improve from 2015 onwards

Tete Nacala railway and port planned to start operating by early 2015

Sena line and port under rehabilitation to be fully achieved by 2017

Tete Macuze railway and port planned to start in 2018

Total logistic capacity of about 60 million tons per annum

Source: EMEM

Coal Production of Selected Companies

Mozambique Coal Exports - Infrastructure map

Mozambique benefits from its long coast line The shortest rout to

market is trough

Beira, but is limited

by the capacity of the

refurnished Sena Line

and the fact that Beira

is a shallow water

port.

Nacala is a deep

water port and has

considerable more

potential than Beira.

However the route to

market is longer and

require a new railway

line that passes

through Malawi and is

currently a Vali

project

The Zambezi runs

close to the Beira line

but has the usual

challenges such as

silting, floods and

droughts.

Mozambique Basin(5)

Pande/Temane – Sasol

Blocos 16 & 19 – Sasol

Sofala Bay – Sasol

M-10 – Sasol

Buzi

Rovuma Basin(5)

Área Onshore – Anadarko

Area 1 – Anadarko

Area 4 – Eni

Area 2 & 5– StatoilHydro

Area 3 & 6 – Petronas

Gas Concessions in Mozambique

14 Offshore Gas Fields

• 50 to 70+ TCF of recoverable

gas in Area 1 (Anadarko);

About 80 TCF in Area 4 (ENI)

• New Petroleum Law recently

approved (Law No. 21/2014,

replaced Law No. 3/2001)

and includes LNG plants

• LNG could have a large

impact on GDP and

transform Mozambique into

a middle-income country

• US$23 billion required for

first two train development

• LNG Special regime under

development

Source: APC

Growing enthusiasm in the LNG industry

15 Comparison to Previous Megaprojects

The Project is different for several reasons, which allows Mozambique to obtain more of the benefit than

certain previous megaprojects have allowed:

Key points

The Project is

materially different

in size, scope and

impact than all

previous

megaprojects in

Mozambique

Mozambique

obtains more fiscal

and industrial

benefits than any

other megaproject

to date

Revenues are tied to

global markets and

the Project can

result in significant

industrialisation

within Mozambique

Key Differences

0

10

20

30

40

50

60

Mozal Sasol Vale Kenmare The Project (6 trains)

To

tal P

roje

ct

Cap

ex (

US

D

billio

n)

Total Capex by Megaproject

Revenues directly linked

to global gas prices

Minimal resource-based

concessions

Beneficiation in

Mozambique

Domestic gas sales

Maximum Fiscal

Benefits

Industrialisation

In nature and size, the Project is different to all previous megaprojects in Mozambique

LNG Value Chain

External market and investments are critical

18 Contents

Section Page

1. Standard Bank Group

2. Standard Bank Mozambique

3. Gas & Coal Investment Opportunities in Mozambique

4. POWER PROJECTS IN MOZAMBIQUE

5. Doing Business in Mozambique

19

Power Overview

• Present Demand is

approx 800 MW

and growing about

10% per annum

• Present supply is

insufficient to meet

growing demand

• Tariffs need to be

adjusted for the

sector to be

sustainable

766

865

978

1,105

1,248

1,411

1,594

1,801

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2013 2014 2015 2016 2017 2018 2019 2020

PROJECTED DEMAND [MW]

Source: EDM

At least US$2 billion are required to meet generation, transmission and distribution

investment needs for the next 5 to 10 years

20 Power Overview

Moatize

(300 MW)

Mphanda Nkuwa

(1500 MW)

EDM / SASOL

(170 MW)

Boroma

(200 MW)

Lúrio

(180 MW)

Cahora Bassa North

(1245MW)

Lupata

(600 MW)

Massingir

(25 MW)

Benga

(600 MW)

Mavuzi 2 & 3

(60 MW)

Alto-Malema

(50 MW)

Kuvaninga

(40 MW)

Gigawatt

(100 MW)

Aggreko

(220 MW)

Nkondezi

(300 MW)

CTM

(100 MW)

ENI

(75 MW)

Colour code: Red – Gas; Black – coal; Blue – Hydro

Source: EDM

Electricity Generation Projects under Inplementation or Negotiation

21

STE Transmission Project: Backbone For Mozambique Electricity Network

Main characteristics of the

STE line:

• The line will make the

North – South link possible

• Total Capacity of 1st phase

1st stage: 2,225 MW

• Total Capacity of the line:

6,200 MW

• Line extension HVDC 500

KV: 1,275 KM (Black Line)

• Line extension HVAC 400

KV: 1,341 KM (Blue Line

• Development time: 2,5

years

• Construction time: 4 years

Source: Vale Columbia Center, Press, Copal Research

Power Projects in Mozambique

22 Contents

Section Page

1. Standard Bank Group

2 Standard Bank Mozambique

3. Gas & Coal Investment Opportunities in Mozambique

4. Power Projects in Mozambique

5. DOING BUSINESS IN MOZAMBIQUE

23 Some Considerations before Investing in Mozambique

CPI is the Government Agency for Investment Promotion

The Centre for Promotion of Investments (CPI) is a Government Agency with the mission of

Attracting and retaining substantial direct domestic and foreign investment (www.cpi.co.mz)

Through this agency, the GoM grants tax and customs benefits to investors as well as other

sector specific benefits for investment projects with a minimum size of US$50 000FOREX

Foreign exchange payments

Need to be effected in foreign currency since the Metical is not freely convertible and cannot

be exported from or imported to Mozambique

Cross-border payments are subject to exchange controls foreseen in the Foreign Exchange

Law and its Regulations

Lending rates have reduced

Base rate for lending in Meticais, FPC (overnight lending rate by the Central Bank

Mozambique to Commercial Banks), has dropped during the recent years and is now stable at

8.25%Banks also use own base rate (prime) as reference, about 500 bps higher than FPC

Banks encouraged to lend in local currency

Banks forced to make provisions of 50% of amount lent if client is not an exporter

Cross-border lending is possible with Central Bank authorization

LIBOR is the common reference / base rate for US$ lending

Some Considerations before Investing in Mozambique

Notable Deals in 2014

Obrigado from Maputo !

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