In the search for commodity products, the products are below the earth’s surface waiting to be discovered. If the world can use the products, companies begin to invest money and then partnerships with the government happen. The expectation is a reasonable stable working environment.
In an article by Geoffrey York of the Globe and Mail, in the country of Mozambique which is located on the eastern coast of Africa, north of South Africa and east of Zimbabwe, trillions of natural gas was found. The project to harness the natural gas was going to be Africa’s biggest foreign investment project a $60 billion offshore gas development. The LNG development is led by France’s Total SA and includes ExxonMobil, Italy’s Eni SA. The development was expected to create a city of 150,000 people and across the country could spur up to $128 billion in capital investments across the country. The LNG would turn Mozambique into the world’s 4th or 5th largest producer of liquefied natural gas and the country’s revenues would turn it into a middle income country. The financing was going to be led by South Africa’s Standard Bank.
Countries around the world have sent soldiers, Portugal, the US, South Africa private contractor, Russian military contractor. The country was going to have a reasonable stable working environment and the government would be able to help the people of the country.
The drawback is hundreds of Islamist rebels killed dozens of people and captured a town called Palma and things were put on hold. Total announced the construction which was delayed and restarted is on delay again. The President of Mozambique Filipe Nyusi and his ruling party Frelimo which is supporting the project said the project will go forth.
Linking to dividend paying stocks, to make money of a yearly basis most companies need a reasonable stable working environment and where that exists, companies can execute their strategies. All over the world, companies are looking for a stable working environment and plans will come. When the pendulum changes, investing closer to home always seems desirable, however investing in commodities means going to where the commodities are.
There are more questions than answers, till the next time – to raising questions.