Washington, D.C., July 2, 2001—The International
Finance Corporation has signed agreements to invest US$25 million as part
of a total debt package of $600 million provided by international lenders
toward doubling the capacity of the Mozal aluminum smelter near Maputo
in Mozambique. The expansion Mozal II project—which includes increasing
the capacity of the Mozal I smelter to produce an additional 250,000 tons
per annum of aluminum metal at a total estimated cost of $1 billion—is
expected to bring significant economic, health, and social benefits to
the regional community.
IFC’s loans are in addition to the $820 million financing package (including
$120 million from IFC) that was provided in 1998 for the initial Mozal
I project which was completed in April 2001—six months ahead of schedule
and $120 million below budget.
Mozal II is expected to increase Mozambique's
net foreign exchange earnings by a further $100 million and GDP by an estimated
7 percent. During construction, the project will employ about 5,000
people, with 295 direct and 1,500 indirect jobs that will be created during
operations, in addition to the 750 full-time jobs that have already been
generated by Mozal I.
Opportunities for local small and medium-sized enterprises (SMEs) will
continue to be created through Mozal's policy of outsourcing all non-core
activities to local companies. The import of project inputs from
South Africa should further stimulate regional trade and integration. The
Mozal Community Development Trust (MCDT) expects to spend about $2 million
annually on social and community initiatives to ensure the project's positive
and beneficial impact on the local people.
IFC has played a lead role in coordinating the lenders to achieve timely
delivery of the debt package and in ensuring that the project continues
to meet IFC's environmental and social policies and guidelines. A
comprehensive program is being designed around Mozal to maximize the project’s
positive impacts, and IFC is an active participant in two key initiatives.
IFC is supporting SME development through a program established by the
Africa Project Development Facility—a technical assistance advisory service
for African SMEs—to give pre- and post-tender advice and training to local
contractors to Mozal. IFC’s SME Capacity Building Facility will
provide financial support for this program. In addition, IFC will
provide $100,000 to co-finance the Mozal Community Development Trust AIDS
awareness program, the first of its kind in Mozambique. Both these
initiatives will be replicable in other IFC projects, increasing IFC’s
role and its developmental impact.
The main project sponsor is Billiton plc, (shortly to become BHP Billiton),
one of the world's largest aluminum producers. The co-sponsors are
Industrial Development Corporation (IDC) of South Africa, a large state-owned
development bank that played a significant role in arranging financing
from South African institutions; and Mitsubishi Corporation, one of the
largest Japanese trading houses.
Mozal II's total project cost of $1 billion will be financed through equity
of $400 million and senior loans of $600 million. Equity will
be provided by Billiton, IDC, Mitsubishi, and the government of Mozambique.
Other institutions providing loans include lenders supported by the
South African Export Credit Agency, BNP Paribas as lead arranger of a facility
backed by Compagnie Française d'Assurance pour le Commerce Exterieur, Japan
Bank for International Cooperation, Development Bank of Southern Africa,
Export Development Corporation, Deutsche Investitions und Entwicklungsgesellschaft,
PROPARCO, and CDC Group plc.
James Bond, Director of the joint World Bank/IFC Mining Department, said,
“The investment demonstrates IFC’s continued confidence in Mozambique
and will provide reassurance to potential investors in other large private
sector projects that are currently being considered.” He added,
“IFC’s involvement will support Mozambique’s image as a country with
a healthy and fast-reforming investment climate, encouraging foreign direct
investment in industry as well as overall private sector development.”
The mission of IFC, part of the World Bank Group, is to promote sustainable
private sector investment in developing countries as a way to reduce poverty
and improve people's lives. IFC finances private sector investments
in emerging markets, mobilizes capital in the international financial markets,
and provides technical assistance and advice to governments and businesses.