Mozal smelter expansion on course, but electricity is needed

Diversified mining house BHP Billiton is in talks with Mozambican authorities about the expansion of its Mozal aluminium smelter, with electricity availability seen as the main constraint. General manager Carlos Mesquita yesterday said a feasibility study on the expansion had been completed and BHP Billiton was in talks with the authorities on how and when to proceed with the $500 million (R3.05 billion) project that would boost aluminium production to 750,000 tons a year from 540,000 tons. "Mozal is ready to start the third phase. The site is already prepared. The only constraint we have now is power availability," said Mesquita. The shortage of additional electric power capacity was a major handicap, he said, adding that Mozal already used four times the country's national average consumption. "We are discussing with the Mozambique government the various options and a possible solution for the energy that is required for the extension, but we are confident that we will achieve good results," he said. "From the moment the [additional] energy is available, the expansion project will start and could come on stream in two to three years."

The existing Mozal smelter requires about 1,000 megawatts of electricity produced in South Africa. Mozal launched operations in September 2000 producing 250,000 tons of primary aluminium a year. It doubled production with the completion of a phase two expansion project. Mozal has sparked significant gains for Mozambique, helping economic growth average just under 10 percent in the last five years. Mozal and petrochemical firm Sasol's $1.2 billion natural gas plant have been described by the government as "mega projects" and seen by analysts as a boost to one of Africa's poorest, yet fastest growing, economies. Mozal is located in Beluluane, about 20km from Maputo. The settlement is growing into an industrial park fuelled by Mozal's monthly spending of about $11 million on local products and services. "We have invested $7.1 million to bring the gas pipeline to Mozal so the industrial free zone now has electricity, land, infrastructure and gas," Mesquita said. About 1,150 employees, 94 percent of whom are Mozambicans, work for Mozal. BHP Billiton owns 47 percent of the smelter, Japan's Mitsubishi owns 25 percent, the Industrial Development Corporation has 24 percent and Mozambique 4 percent. (05/04/05 - Business Report - Mateus Chale)