Good afternoon. On or around 15 March, aluminium maker Mozal is expected to halt operations at its aluminium smelter in Beluluane, Maputo province, with the loss of over 1,000 directly employed jobs at the firm and some 5,000 indirect jobs, as well as 22,000 jobs supported by the plant. The plant will be maintained in a usable state, but once it stops producing, it will take about a year to restart again. Meanwhile, the clock is ticking on its future, and the Mozambican government is trying to formulate ideas.
As previously reported, several years of negotiations between Mozal’s majority owner South32, the Mozambican government, and power suppliers in Mozambique and South Africa failed to result in an agreement on an electricity price for Mozal’s power supply contract. Partly this stalemate is explained by the government’s position that South32 has been asking to buy power below its cost of production, whereas South32 insists that it cannot afford to buy power at the prices it was offered. It is also explained by a lack of interest on the Mozambican government’s side in Mozal’s future.
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This is not just a matter of indifference or economic nationalism, although there is an element of that. The government appointed a technical commission several years ago to look at Mozal and its future, and it came to the conclusion that the plant did not represent a good model for industrialisation in Mozambique. Mozal was conceived as a project in the 1990s in the aftermath of Mozambique’s civil war, as a reconstruction project to be an anchor for attracting other investors to the country. It relies on alumina imported from Australia, cheap labour and especially cheap electricity, supposedly unaffordably cheap. The commission proposed three options to the government: agree a new power price, close the plant permanently, or sell it to a new investor, probably in India or China. The first option seems to have been abandoned, leaving two.
