Press Releases

IFC Invests in Mozal II-Expansion of Aluminum Smelter in Mozambique

L. Joseph
Phone:  (202) 473-7700

Fax:  (202) 974-4384


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.

Mozambique Aluminum (Mozal 2)