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African ag group born from oil prospector takes comfort in $7bn gas project

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Agriterra, the African agriculture group developed from an oil prospector, said it was looking to liquefied natural gas to improve its fortunes, sapped by drought, unrest and a currency slump in its key Mozambique market.

Agriterra, which was born some eight years ago from Sudan oil prospector White Nile, termed as "encouraging" to boosts to the Mozambique market from the announcement last month by consortium led by Italy's Eni of a $7bn gas platform off the coast of the south east African country.

"This important development has already started to generate positive economic effects within Mozambique, both on a macro-economic level… as well as at the more granular level of anticipated demand for our products," said Caroline Havers, the group's chair.

Agriterra could "now capitalise on the growth that will inevitably come from the development of the LNG [liquefied natural gas] industry".

'Very difficult period'

The improved outlook followed what Ms Havers acknowledged had been a "very difficult period in Mozambique over the last two years", which has suffered fresh political and military unrest, and saw inflation hit 25% for 2016 – a year in which its currency, the metical, halved against the dollar.

"The recent macro-economic conditions in Mozambique have been very challenging," she said.

However, the outlook has also been improved by a ceasefire between the ruling Frelimo party and the Renamo opposition party and rebel movement, the ending of a two-year drought, and signals that the International Monetary Fund may renew support to the country.

Such developments are "expected to lead to an improvement in trading conditions going forwards".

'Flood of maize'

However, they came too late to prevent Agriterra reporting a loss of $3.77m for the 10 months to the end of March, the new end to its financial year, compared with a loss of $8.46m for 12 months to close of May last year.

Revenues came in at $12.81m, compared with $18.51m for the 12 months to May 2016.

In grains, the group fell to a $81,000 loss at the earnings before interest, tax, depreciation and amortisation (ebitda) level, reflecting an early-2017 tumble in grain prices as economic woes restrained demand, at a time when drought relief provoked a release of supplies on to the market.

Ms Havers flagged "the flooding of some markets with surplus maize inventory, either held on a speculative basis by traders or held at Beira port for delivery to neighbouring countries that were then unable to complete on their purchases".

In beef, the group reported a reduction in ebitda losses - to $1.02m for the 10 months compared with 2,02m for the previous 12 months – helped in part by a farm destocking drive.

Agriterra shares stood 5.3% lower at 0.18p in lunchtime deals in London.

By Mike Verdin

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