Mozal Aluminium: An economic beacon for 21st Century Mozambique

The economic impact of the Mozal Aluminium company cannot be understated in the context of Mozambique in the 21st Century.

In December 2015, Mozal Aluminium Company was announced as the largest company in Mozambique in 2014, according to the 17th edition of the list compiled by consulting firm KPMG Moçambique.

mozalKPMG analysed the performance over 2014 of the largest companies in the country through criteria such as turnover, profitability of the company and its financial autonomy.

Mozal is an aluminium smelter joint project in Beluluane Industrial Park, Maputo, Mozambique. The project is a smelting facility that began operations as a producer of aluminium exclusively for export. The smelter is located 20 kilometres west of the city of Maputo in the south of the country.

Mozal began life as a joint venture between BHP Billiton (47.1 per cent), Mitsubishi Corp. (25 per cent), Industrial Development Corp. of South Africa (24 per cent), and the Government of Mozambique (3.9 per cent).

The project got underway in 1998 as part of a recovery programme led by the Mozambican government’s active desire for foreign investment to help rebuild the nation after the country’s civil war in the early 1990s.

The Mozal smelter was officially opened in September 2000. It was the first major foreign investment in Mozambique and is the biggest private-sector project in the country.

The expansion of the Mozal Aluminium smelter was approved in June 2001. Mozal Aluminium Phase II involved the construction of a second potline, ultimately doubling the capacity of the smelter. It was completed in 26 months from go-ahead in June 2001 to full commissioning of all 288 pots in August 2003, seven months ahead of schedule and US$195 million under budget.

The Mozal Aluminium smelter expansion was officially opened on 8 October 2003 and is now the largest aluminium producer in Mozambique and the second-largest in Africa, having a reported total annual production of around 580,000 tons. It is responsible for almost a third of the country’s official exports and also uses 45 per cent of the electricity produced in Mozambique.

Another important development in the history of the site came on 15th February 2013, when an agreement between Mozal Aluminium and Midal was signed, marking a critical milestone in the history of Mozal. This was the beginning of Mozal Aluminium’s participation and contribution to the local downstream industry by supplying aluminium ingots. The agreement was testimony of Mozal Aluminium’s commitment to developing local downstream industries with significant impact on the local economy.

When BHP Billiton holdings were demerged into South32, a new name became connected to the Mozal Aluminium project.

South32 is a globally diversified metals and mining company with high-quality and well maintained operations mining and producing bauxite, alumina, aluminium, energy and metallurgical coal, manganese, nickel, silver, lead and zinc in Australia, Southern Africa and South America.

“The roots of South32 are in the Southern Hemisphere, with a head office in Perth and regional hubs in Perth and Johannesburg. Management of South32 Marketing is based in Singapore, with offices in London to support customers in Europe, the Middle East and Atlantic regions and in South Africa and Australia to service our domestic customers.,” the official website describes.

“South32 listed in May 2015 and our securities trade on the Australian Securities Exchange (ASX), Johannesburg Stock Exchange (JSE), London Stock Exchange (LSE) and the NY American Depositary Receipts Programme under the listing code of S32.

“We believe that when we work together, we create a brighter future for all,” the site continues.

South32 has significant investment in the African Continent, with four operations in South Africa and Mozambique including South Africa Manganese, South Africa Aluminium and South Africa Energy Coal, as well as Mozal Aluminium.

“South32 is committed to supporting the developmental agendas of downstream beneficiation in the African countries in which it operates. More than 30 per cent of the ore produced at Hotazel is sent to Metalloys for beneficiation, where the manganese alloy is produced. Our Aluminium business supplies part of the primary product to a local company that manufactures a variety of value-added aluminium-based products and materials for local consumption and export.

“Our South Africa operations are fully committed to the requirements stipulated in Broad-Based Black Economic Empowerment (B-BBEE),” the corporate website explains.

South32 uses a regional operating model.

“Our businesses are run by people who understand their communities and the environment in which they operate. Our African businesses are managed from a regional hub in Johannesburg, with our Australian and South American businesses managed through Perth,” states the website.

“This integrated approach allows us to more closely align our businesses with the needs of our stakeholders and empowers us to optimise support functions regionally to deliver more efficient and productive operations.”

South32’s involvement in the Mozal Aluminium site might be relatively new, but it remains fully aware of its responsibilities, as it explains online:

“The Mozal Aluminium smelter was established in Mozambique in July 1998. Backed by a US$2 billion investment, the smelter was the largest private investment in the country and the first large foreign direct investment in Mozambique.

“Mozal uses Aluminium Pechiney AP35 technology to produce standard aluminium ingots. The smelting process involves the electrolytic reduction of alumina that has been dissolved in a molten electrolyte bath to produce liquid aluminium in specialised reaction vessels that are known as pots.

“Mozal, in partnership with other organisations, established Mozambique’s Linkages Program (Mozlink) in 2001. The programme has resulted in training for more than 100 small and medium enterprises (SMEs) and more than 3,000 employees have directly benefited from its activities. Participating SMEs, which have shown an average revenue growth of 34 per cent in total annual turnover during the past three years, have been enabled to generate more than US$30 million in revenue.

“Midal, Mozambique’s first downstream aluminium industry has been receiving aluminium from Mozal since October 2014. Mozal remains the largest industrial employer in Mozambique and delivers a significant contribution to the Mozambican economy.”

That contribution stretches a lot further than direct employment however.

The Mozal Aluminium established the Mozal Community Development Trust (MCDT) in 2000. And enabled by an investment that exceeded US$34 million, the Trust developed 200 projects and provided a governance framework for the community projects to address multiple challenges in the region.

It continues to support the community in the Boane district through micro business development, education and training, health and environment, sports and culture and community infrastructure.

“In line with the principles of sustainability, the Trust focuses on assisting the community to generate income on a continuous basis and improve living conditions. It aims to provide access to health care, water, sanitation and education in an effort to alleviate poverty levels.,” states the South32 website.

“Through this initiative Mozal Aluminium has built eleven schools and trained teachers. The South32 asset has helped to build a secondary school and a technical institute to assist children from the community. It has also helped to refurbish five local clinics and provided finance to farmer’s associations, who previously produced only 300 kg of food per year per family. Through MCDT aid these associations now produce a minimum of 2 tons of food per family.”

Mozal Aluminium has demonstrated the positive impact that foreign investment can have on helping to develop economies and improving lifestyles. Its legacy is perhaps one that has helped to bring Mozambique out of the ravages of civil war and into the 21st Century with optimism, hope and economic purpose.