The consortium of BHP Billiton (47%), Mitsubishi Corporation (25%), the
Industrial Development Corporation (24%) and the Mozambique Government (4%) is
proceeding with the US$1.36 billion 233,000 ton a year Mozal aluminium smelter
near Maputo. The financing structure consists of 38% equity, 50% debt, including
an export credit from SA worth $670m, and a 12% subordinated debt ($150m). The
Caisse Francaise de Developpement has approved a credit of 160 million French
Francs for participation by its private sector arm, Proparco, in the project.
The International Finance Corporation has approved an investment of US$ 120
million in the construction of the foundry. Mozal will be developed in an
industrial free zone and will pay tax at a rate of just 1% of turnover. It will
be exempt from customs duties, sales and circulation tax. The plant will be
commissioned in 2001. Staff will get a 40% reduction on their income tax bill.
The Mozal project will make BHP Billiton, the western world's third largest
aluminium producer. Mozal would produce about 233,000 tons of aluminium a year,
with capacity to double to 466,000 tons a year. This will increase Billiton's
current aluminium capacity of 810,000 tons a year, including 670,000 tons from
Alusaf, to 1.2 million tons a year.
The consortium believes Mozal will be cost competitive and remain profitable
even with seriously low aluminium prices in the future. Mozal's initial break
even point will be at an aluminium price of US$750/t. After this Mozal is
forecast to have a cash operating cost of $980/t at a London Metal Exchange
(LME) aluminium price of $1650/t.
Canadian based SNC-Lavalin and Engineering Management Services and Murray &
Roberts subsidiary,. Engineering Management Service (EMS), will provide the
project and construction management and engineering procurement. The value of
the contract is C$100m.
The smelter will have the capacity to double production and consume about
450MW of electricity and 500,000 tons of alumina a year, some of which will be
supplied from the Worsley alumina mine in Australia and from Malawi. The
consortium has agreed a particularly low price for its electricity for the first
six years with Eskom and Mozambican electricity utility EdM. Thereafter, the
smelter will be locked into a competitive electricity contract for six years and
an agreement comparable to that of Billiton's Hillside smelter for a further
twelve years. In the second phase, the foundry will be supplied by the Mepanda
Uncua Dam some 70 kilometres from the Cahora Bassa Dam via a planned US$500
million 1500 km transmission line to Maputo will feed the second stage of the
aluminium smelter. France has made a credit of 10 million French Francs to
Mozambique for a feasibility study on Mepanda Uncua. During the second 12 year
phase of project, electricity prices will be linked to LME aluminium prices.
Construction of the foundry aluminum factory started in July 1998.
Construction on the aluminiun smelter is ahead of schedule and should now be
ready for production in the third quarter of 2000. The project will occupy an
area of 140 hectares.
In mid 2001, the partners have decided to proceed with the construction of a second phase of Mozal that will double capacity of the plant. Mozal 2 will have a capacity of 253,000 t/y of aluminium, for a capital investment of US$860 million, and will take the form of a second potline running parallel to the first.
BHP Billiton Limited
BHP Billiton has a 47% interest in the Mozal Project, Mozambique’s first aluminium smelter.
