WASHINGTON, D.C., June 25—The International Finance Corporation (IFC) has approved a US$120 million investment for the establishment of the Mozal aluminum smelter project in Maputo, Mozambique. This investment represents one of the largest commitments for IFC's own account ever approved by the Corporation.
The project consists of the construction and development of a 245,000-ton-a-year aluminum smelter to be located near the port of Maputo. The total project cost is estimated to be US$1.36 billion.
Mozambique, which is just emerging from a 17-year civil war, is one of the world's poorest and most indebted countries with a per capita GNP of US$80 and unemployment over 45 percent. One of the government's top priorities is to rehabilitate the country's devastated social and industrial infrastructure including its transportation, power generation, water supply and sewerage systems. The Mozal smelter project is expected to provide major economic benefits to Mozambique. The project will triple the country's exports, bringing in more than US$430 million per year in foreign exchange earnings. It will create 5,000 jobs during the construction phase and 900 full-time jobs once the smelter is in operation. Moreover, in order to accommodate the actual construction of the smelter, Mozal will help upgrade and modernize the local infrastructure including the port, roads, power and telecommunication lines, the water supply and draining systems.
"The development of the Mozal smelter will provide employment opportunities, develop Mozambique's infrastructure, directly contribute to the country's industrialization and significantly boost regional trade," said Mr. Tei Mante, Director, Sub-Saharan Africa Department, IFC. "We expect IFC's involvement in Mozal to increase confidence among other financial institutions interested in investing in Mozambique."
The IFC financing package consists of a quasi- equity investment of up to US$65 million and a loan of up to US$55 million. In addition to IFC's investment, Gencor Ltd., a South African Metals and Mining Company and owner of Alusaf Ltd., operator of one of the world's largest aluminum smelters, is investing US$125 million in equity along with the Industrial Development Corporation of South Africa which is also investing US$125 million.
To date, IFC has invested over US$11 million for 6 projects in Mozambique.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
