US Expands Economic Ties with Mozambique, Backs Mineral and Gas Projects

MAPUTO, Mozambique, Sept. 16, 2025 – A recent diplomatic meeting between Chargé d’Affaires of the US Embassy in Mozambique and the country’s President Daniel Chapo was strategically well-timed.

The meeting, which was held in the backdrop of the two countries celebrating 50 years of diplomatic relations, saw the United States express interest in deepening economic cooperation with Mozambique for a “bright future”.

However, the bilateral meeting coincides with tensions lately prevailing in Mozambique, a strife-torn country marred by political conflict, climate change concerns and governance issues.

With global intervention, the East African nation is hopeful that the fragile situation does not spiral any further in which US can play a huge role.

In terms of the mining, there has been a temporary suspension of this activity in Mozambique after facing a strong criticism from the local population, which has vociferously been citing environmental pollution, notably contamination of the rivers caused by artisanal mining.

Despite the local residents having locked horns with the government, Francisca Tomás, Governor of the central Mozambican province of Manica, last week announced that the suspension of mining in the province awaits a final decision from the Ministry of Mineral Resources and Energy (MIREME). An icebreaker to the political logjam in Mozambique, will once again enhance investment sentiment and attract overseas companies to make investment in its coal mines, gemfields and gas projects.

Notably, in the run up to the completion of 50 years of US-Mozambique diplomatic ties, America’s government-run financial institutions opened coffers to fund local projects in the African country.

Know More About US Agencies’ Funded Projects in Mozambique

DFC Funding: In August this year, America’s Development Finance Institution, or DFC, gave a $6.5 Million loan to Mozambican mining firm Twig Exploration and Mining Limitada, or Twigg, to support its Balama Graphite projects.

The loan is part of a larger $75 million allocation for the project, earmarked by the DFC as working and sustaining capital.

There is also a plan to expand the mine’s production capacity to 350,000 tons per annum for which an additional $4.5 Million will be disbursed October this year.

The US customers of Twigg are likely to receive graphite before end of the current month, while as shipments to China would subsequently follow. Notably, Twiggs resumed operations in Balama in June 2025 after lifting force majeure.

EXIM Support: In March this year, US vowed a $4.7 Billion loan to a fossil gas plant in Mozambique, for which opposition to its environmental aspects has been a bone of contention.

However, the US Export-Import Bank, EXIM, a government agency, has approved financial support for the liquefied natural gas project run by French energy giant TotalEnergies in Mozambique’s northern Cabo Delgado region.

While the in-principal approval to the deal was largely reported, EXIM took time to issue an official statement confirming the deal

Support from the US is being considered as a game-changer to unlock financing for an energy project touted to be Africa’s largest-ever, with a total expected cost of $20 billion.

The loan is a departure from Mozambique’s possible ban on public funding for oil and gas developments abroad that rich countries, including the US, were on the verge of agreeing at the end of last year.

What are Other Key American Investments in Mozambique?

Political turmoil in Mozambique has taken a toll on its economy with many foreign investors shying away from making investments in the country. Traditionally, US has considered Mozambique as a strong ally for which its bilateral aid exceeded $550 Million in 2023, being the highest in Africa.

Besides, Millennium Challenge Corporation, or MCC, inked a $537 Million compact with Mozambique the same year. In 2022, Mozambique was among the few countries selected to receive focused attention and aid through the Global Fragility Act and the Department of Energy is financially backing a Mozambican lithium mine. Exxon Mobil is looking to finalize a $30 billion natural gas project in Mozambique.

The efforts of DFC of partnering with the private sector in Mozambique is being seen as a step to advance US foreign policy and strengthen national security by mobilizing private capital around the world.

Amid its large-scale trade investments in Mozambique, the United States has geopolitical aspects to consider. China has made major investments in Mozambique for decades. Russian ties go back to the Soviet Union’s backing of the democratic socialist ruling political party Frelimo during the Cold War. Both China and Russia are closely associated with the Frelimo camp, but neither country has the locus standi to help broker a political settlement. It becomes pivotal for the US to closely monitor Chinese and Russian influence, as both the nations would want a US retreat from Mozambique. 

Support from the US is being considered as a game-changer to unlock financing for an energy project touted as Africa’s largest-ever, with a total expected cost of $20 billion.

Inputs from Saqib Malik

Editing by David Ryder