Press Release No. 99/42
L. Joseph
Phone:(202) 473-7700
Fax:(202) 974-4384
E-mail:ljoseph@ifc.org
IFC INVESTS IN MOZAMBIQUE ALUMINUM SMELTER
WASHINGTON, D.C., October 23, 1998 --- The International Finance Corporation signed agreements to invest US$120 million towards construction of the Mozal Aluminum smelter, and international lenders will provide financing totaling $820 million. The project is the largest single private sector investment to date in Mozambique and will boost the economy of one of the world's least developed countries.
The Mozal project will contribute to successful economic reform initiatives in Mozambique, with annual production capacity of 250,000 tons of primary aluminum ingots that will triple the country's exports and add more than 7 percent to GDP from the first years of operation. Construction of the smelter will create jobs, provide extensive training, include construction and upgrading of key infrastructure that will also be used by other industries, and it will stimulate regional integration as a result of enhanced trade with South Africa. More indirectly, the project will likely spawn small industries that will supply, and create demand for, the smelter.
IFC fostered the project by serving as legal coordinator, preparing an independent detailed analysis of economic results and environmental and developmental impacts, and reviewing the environmental work, which helped the sponsors to select the site and ensure conformity to World Bank Group standards. This is also IFC's largest ever investment for its own account.
The main project sponsor is Billiton Group, one of the world's largest aluminum producers. The co-sponsor is 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 Corp., one of the largest Japanese trading houses.
Mozal's total project cost of US$1.340 billion will be financed through equity of US$520 million, subordinated loans of US$150 million, and senior loans of US$670 million. Equity will be provided by Billiton, IDC, Mitsubishi and the Government of Mozambique. IFC will provide US$65 million in a subordinated loan. Other institutions providing subordinated loans include Commonwealth Development
Corporation (CDC), Deutsche Investitions und Entwicklungsgesellschaft (DEG), Development Bank of Southern Africa (DBSA), and Société de Promotion et de Participation pour la Coopération Economique S.A. (Proparco). Senior loan financing of US$670 million is being provided by IFC, the lenders supported by Credit Guarantee Insurance Corporation of South Africa (CGIC) and Compagnie Française d'Assurance pour le Commerce Exterieur (COFACE), CDC, DBSA, DEG and Proparco, with IFC's senior loan amounting to US$55 million.
The agreements were signed for IFC by Mr. Jemal-ud-din Kassum, IFC Vice President for Investment Operations, who noted that Mozal represents the confidence of investors in the economy of a country that is firmly on the right track.
Mozambique is in the ''Extending IFC's Reach'' initiative, a program to reach 16 countries and regions where IFC has had limited experience and where it is particularly determined to do more business.
IFC, part of the World Bank Group, encourages economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
