The report from Human Rights Watch says farming communities that were previously self-sufficient have been relocated to arid lands where they cannot farm, resulting in food shortages and rendering them dependant on the coal companies.
The group said the companies, including Vale and Rio Tinto, and the government of Mozambique, needed to do more to look after the communities’ needs.
"Many of the 1429 households resettled to make way for Vale and Rio Tinto's international coalmining operations ... have faced serious disruptions in their access to food, water, and work," the group said on Thursday.
Human Rights Watch said approximately 60% of the coal-rich Tete province has been zoned for mining, reducing the amount of viable farmland.
It accused the government of being too eager to approve licences and receive investment that it neglected the needs of its people.
“These multi-billion-dollar investments are supposed to drive development in one of the poorest countries in the world, yet they have actually made life harder for many people,” said a senior researcher at Human Rights Watch Nisha Varia.
“Mozambique’s government should work with Vale and Rio Tinto to make sure the resettled farmers have productive land by the next farming season and appropriate and timely compensation for shortcomings in the resettlement process.”
“The government should consider calling a halt to additional licenses until adequate protections are in place,” Varia added.
In response to the group’s allegations, Vale told AFP it has managed resettlements "based on respect for human rights and aligned with international standards."
The Brazilian firm also said it had fixed water pumps and irrigation systems and repaired houses in resettlement areas, adding it would compensate the 83 families who still have not received all the farmland they were promised.
A Rio Tinto communication to Human Rights Watch said the company was aware of some of the issues raised but the rights group said that while both companies have made commitments to improve living standards, conditions are still poor.
Rio Tinto and Vale have invested as much as $10 billion in mines and projects in the Tete province, home to an estimated 23 billion tons of coal, some of the largest untapped reserves in the world.
Exports from Mozambique have been estimated to reach a staggering 100 million tonnes over the next decade, fuelling industrial development in India and China.
"The Vale and Rio Tinto projects in Tete province are just the first in many large projects and resettlements likely to take place over the next few decades in Mozambique, making the lessons they have to offer vitally important," said Varia.