Mozambique News Agency

No.192, 9th October 2000


MOZAL aluminium smelter inaugurated

The largest single private sector investment ever in Mozambique, the MOZAL aluminium smelter at Beluluane on the outskirts of Maputo, was officially inaugurated on 21 September, in the presence of five heads of state - Presidents Joaquim Chissano of Mozambique, Thabo Mbeki of South Africa, Robert Mugabe of Zimbabwe, Festus Mogae of Botswana, and Bakili Maluzi of Malawi.

The smelter began producing aluminium on 18 June, when the first of the 288 reduction cells came on line, producing aluminium from alumina through electrolysis. By mid September 35 per cent of the reduction cells were installed and operational, and the smelter should be producing at full capacity by January.

MOZAL will produce 250,000 tonnes of aluminium ingots a year, which will more than double the value of Mozambican exports, and add about seven per cent to Mozambique's Gross Domestic Product (GDP).

The construction of the smelter set a world record for the aluminium industry: from the go-ahead for the project to the casting of the first metal took just 25 months, six months less than expected. The smelter came in under budget. The initial estimate of the costs for building MOZAL was $1.3 billion, the actual cost was $1.2 billion.

At the inauguration ceremony President Chissano declared that "the construction of MOZAL is an example of our commitment to the development and prosperity of our country and of southern Africa".

He stressed that "political and economic stability in Mozambique are still crucial for the government for implementing its agenda for the country's sustainable development".

President Chissano pledged to "proceed with the relevant political and economic reforms to attract further national and foreign investment, which is so essential for our fight against absolute poverty".

President Chissano stressed the partnerships that have been created in the construction of MOZAL, mentioning the electricity supply company MOTRACO, a joint venture between the Mozambican, South African and Swazi electricity companies (EDM, ESKOM and SEB). This was formed to supply the 450 megawatts of power that MOZAL needs, but it also makes possible the expansion of the electricity grid in southern Mozambique and Swaziland.

Brian Gilbertson, the chairman and chief executive of the London-based metals company Billiton, the major shareholder in MOZAL, with 47 per cent of the equity, told the ceremony that "measured along any dimension - economic, social or environmental - MOZAL will stand as an industry bench mark for many years to come".

The other shareholders in MOZAL are the Japanese company Mitsubishi (25 per cent), the Industrial Development Corporation (IDC) of South Africa (24 per cent), and the Mozambican state itself (four per cent).

Total equity was around $500 million: the other $800 million initially estimated was raised as loan capital from, amongst others, the World Bank's International Finance Corporation (IFC), the European Investment Bank, the Commonwealth Development Corporation (CDC) of Britain and the Development Bank of South Africa (DBSA).

At the peak of construction, the MOZAL site was employing 9,000 people, about 70 per cent of whom were Mozambican. With the shift into the operational phase, the numbers directly employed has dropped to 743, of whom 88 per cent are Mozambican.

The Mozambican state will take four per cent of any dividends distributed. But for President Chissano, speaking shortly after the inauguration ceremony, "this is not the most important factor. What is important is the multiplier effect that this factory will have on the economy".

Although relatively few people are employed by the smelter itself, there would be many more jobs created indirectly, the president stressed.

Brian Gilbertson, told the reporters that the smelter hoped to generate more jobs in Mozambique by outsourcing many services, such as catering and gardening. Eventually he hoped that Mozambican suppliers would be able to provide the bulk of the goods and services required.

Chissano and Gilbertson were both optimistic that a second phase of MOZAL will be built, doubling capacity to 500,000 tonnes of ingots a year.

Gilbertson pointed out that space was already available for MOZAL-2. He said that Billiton had increased its equity in the Worsley alumina refinery in Western Australia precisely with MOZAL-2 in mind, to ensure that sufficient quantities of the raw material would be available.

President Chissano pointed out that MOZAL had bought significant benefits to the local area. The new telecommunications system installed meant that "Beluluane now has a phone system that is perhaps better than that of Maputo".

Mikio Sasaki, the chairman of Mitsubishi of Japan, which has a 25 per cent share in MOZAL, declared that this was his company's largest investment in Africa, and praised the "very strong support received from the Mozambican and South African governments".

Privatised banks struggling

Both Mozambican commercial banks that have passed from state to majority private ownership are losing money, leaving the taxpayer to keep them alive.

A shareholders' meeting on 4 October of the largest of the country's banks, the Commercial Bank of Mozambique (BCM), revealed that in 1999 the bank lost 1,987 billion meticais - at current exchange rates that is $127 million.

The independent newsheet "Metical" on 6 October cited what is described as "a credible banking source" as warning that the financial disaster in the Austral Bank (which used to be the People's Development Bank, or BPD, when it was under state ownership) may be even worse.

However, the executive director of this bank, K Muganthan, denied the claim. He told "Metical" that last year the Austral Bank lost $10 million. Sixty per cent of the bank is owned by a consortium headed by the Malaysian Southern Bank Berhard, but 40 per cent is still state owned.

The implications for the state from the BCM disaster are much, much worse. The shareholders agreed to rescue the bank by mobilising 1,704 billion meticais ($109 million) over the next six months. The state still holds 49 per cent of BCM, suggesting that $52 million will be raised by the state. This is almost double the country's predicted debt service payments for this year ($26.9 million). It is also much more than the $39.2 million which debt relief measures released for use in poverty reduction programmes.

When the BPD was privatised in 1998 the state had to pick up the tab for non-performing loans and other charges: according to "Metical", amouning to $40 million.

Prior to the 1996 privatisation of the BCM, the bank was the victim of the largest fraud in Mozambican history. $14 million was stolen: the men responsible have been named but never bought to trial, and not a penny has been recovered, again leaving the state to pick up the tab.

Machungo heads two largest banks

At the BCM shareholders' meeting former Prime Minister, Mario Machungo, was elected chairman. This makes Mario Machungo the chairman of the board of the country's two largest banks, the Commercial Bank of Mozambique (BCM), and the International Bank of Mozambique (BIM).

In 1998, these two banks accounted for 54 per cent of all deposits, and 61 per cent of bank credit. Since then the BIM has been rapidly expanding.

Fears of a monopoly arise not merely because Machungo is at the head of both BIM and the BCM, but because the same Portuguese financial concern is the majority shareholder in both banks.

BIM was set up in 1995, with the BCP/Atlantico group of Portuguese tycoon Jardim Goncalves as the dominant shareholder. In 1996, the then state-owned BCM was privatised, with a consortium headed by the Portuguese Mello Bank buying 51 per cent of the shares.

At the end of 1999, the BCP and Banco Mello merged in Lisbon. All the assets of the Mello group were transferred to the BCP, and the Mello group became the largest shareholder in the BCP, now the largest single financial institution in Portugal.

Interviewed by Mozambican Television on 3 October, Machungo insisted that there was no question of BIM and the BCM merging. But the appointment of Machungo as BCM chairman leads to suspicions that there is a de facto merger, albeit not a de jure one.

The previous chairman of the BCM board, former Finance Minister Eneas Comiche, now becomes deputy chairman. The meeting also appointed former industry minister Oldemiro Baloi, and former deputy finance minister Carlos Jessen, as directors of the bank.

Unemployment rate rises in Cabo Delgado

The paralysis of key industries in the northern province of Cabo Delgado pushed the local unemployment rate up by 10 per cent in 1999, according to a provincial government report on its social and economic programme.

Industries such as the graphite mine in Ancuabe, the "Marmonte" marble quarry in Montepuez, and the textile factory "Texmanta" in Pemba, which were once major employers, have closed their doors.

The report was presented on 5 October during an extraordinary meeting of the provincial government in Pemba, to President Joaquim Chissano.

Cabo Delgado governor Jose Pacheco said that in order to reverse the situation, the government is creating conditions for the promotion of private investment.

Apparently, this has borne fruit: already six projects worth $16 million have been implemented, but so far only 147 new jobs have been created - at full implementation these projects will employ a thousand people.

Unemployment is not the only problem that affects the province. Peasant farmers have inadequate agricultural tools, there are marketing problems, there are few schools and clinics, there are uncontrolled bush-fires, and there is the ever-present threat from wild animals.

As regards agriculture, the province only met 92 per cent of its initial target, mainly due to the slump in the world market price of cotton, and to inadequate rains.

Meanwhile, 73 farmers in Chiure and Ibo districts have received 125 goats as part of building up the province's livestock herds, said Pacheco.

There was good news from the provincial fisheries sector. 704 tonnes of fisheries produce was landed, about 21 per cent more than the initial target.

Pacheco expressed satisfaction at the performance of his government, particularly as shown by the expansion of the school network - 65 more classrooms were built in 1999, and enrolment went up by nine per cent.

The education sector's initial plans envisaged the enrolment of 159,858 pupils in the province's schools, but in the event 174,344 were enrolled.

Pacheco also presented the provincial economic and social plan for 2001 which forecasts a growth of five per cent.

The government has defined four priorities: the development of human resources, expansion and improvement of infrastructures, promotion of investments, and an increase in production.

Renamo demonstrations aim to topple government

Luis Gouveia, a Renamo parliamentary deputy, has announced that the purpose of Renamo's planned nation-wide demonstrations is to bring down the government.

Gouveia, who was the election agent for Renamo leader Afonso Dhlakama in the 1999 presidential election, was speaking in the central city of Quelimane, which was broadcast on Radio Mozambique's on 4 October.

Gouveia stated that initially Renamo had only planned to hold the demonstrations in three central and northern cities (Beira, Quelimane and Nampula), but it had changed its plans and they would now be held "from the Rovuma to the Maputo" (the rivers that mark the country's northern and southern boundaries).

Gouveia promised that the demonstrations would be held day after day "until the government falls". Renamo would continue staging its demonstrations "until we enter Ponta Vermelha (the presidential palace in Maputo)".

President calls for preservation of peace

President Joaquim Chissano on 4 October called for the preservation of peace and the consolidation of national unity, in order to promote the country's cultural, social, and economic development.

Speaking in Maputo at a ceremony to mark the eighth anniversary of the signing of the Rome Peace Accord between the Mozambican government and the then apartheid-backed Renamo rebels, on 4 October 1992, which brought to an end the war of destabilisation, President Chissano said that his government will continue to work for total peace throughout the country and the region, and to promote international cooperation.

The signing of the accord between President Chissano and Renamo leader Afonso Dhlakama was the culmination of more than two years of negotiations between delegations led by the then Transport Minister Armando Guebuza, and the man then regarded as number two in Renamo, Raul Domingos.

Guebuza is currently the head of the Frelimo parliamentary group, and is one of the most influential figures in the ruling party. Domingos was the head of the Renamo parliamentary group in the last legislature, but was sidelined in the current one, prior to being expelled from Renamo in late September.

Reacting to the Renamo threats, President Chissano said that the reasons for calling such mass protests "must be clear and convincing", and not aimed to bring about the downfall of a legally established government.

Renamo says that it does not recognise President Chissano's government, on the grounds that the 1999 general elections were fraudulent. But the Supreme Court rejected Renamo's appeal against the election results.

President Chissano recalled that the Rome Peace Accord was based on the recognition of existing Mozambican laws and institutions, adding that this is the spirit that must prevail. Peaceful demonstrations are allowed in the country, but must take place within the law, he said.

Senior Renamo members have threatened to carve the country into two chunks at the Save river, which marks the natural boundary between the centre and the south: the north and centre, they say, would be ruled by Renamo.

Raul Domingos reacts to expulsion

Raul Domingos, former head of the Renamo parliamentary group, on 29 September accused the Renamo leadership of violating the party's statutes in expelling him.

The Renamo National Council, meeting in the central city of Quelimane on 21 September, decided to expel Domingos from the party after receiving a report from a commission of inquiry set up to investigate Domingos' behaviour during what Renamo described as "secret negotiations" with the government over the results of the December 1999 election results.

Despite Domingos' denials, the National Council decided that President Joaquim Chissano had been telling the truth in June, when he said that Domingos had used the talks to ask for money to solve his personal problems.

Domingos declared that his expulsion was "an illegal act". It was an expression of "abuse of power by some people within Renamo, and was orchestrated outside of the Renamo statutes".

Asked why Dhlakama had not attended the National Council meeting, Domingos said "Many people were surprised at his absence. For such a radical measure as expelling a senior member, the president of the party, who is statutorily the chairperson of the National Council, should be present".

Domingos said he would continue fighting for those ideals from the Assembly of the Republic. The expulsion does not affect Domingos' standing as a parliamentary deputy as he has not joined or formed another party.

Domingos was in sharp disagreement with the suggestions made by several Renamo leaders (including general secretary Joao Alexandre) that, if Frelimo does not accept Renamo demands for power-sharing, then the country should be divided at the Save river.

He had been accused of "betraying" Renamo, "but those who want to divide the country are the real traitors within Renamo", declared Domingos.

One of the reasons given for expelling Domingos was the fact that he has business interests jointly with Frelimo members.

Domingos told the reporters that he owns a company called FLOTUR, which operates in the areas of forestry, transport and tourism. FLOTUR had joined the consortium which put in the successful bid to manage water assets in Maputo and six other Mozambican cities.

FLOTUR has six per cent of the shares in this consortium, Aguas de Mocambique. Among the other companies in the consortium is Mocambique Gestores, the owners of which include Armando Guebuza.

This was the basis for the accusation that Domingos was involved in supposedly corrupt business deals with Frelimo leaders.

Domingos suggested that reporters might investigate "Peixe de Mama", 60 per cent owned by former cooperation minister Jacinto Veloso,40 per cent is in the hands of a former Renamo representative in Lisbon, Jorge Correia, who is allegedly working on behalf of Dhlakama's wife.

INGC needs $3.5 million contingency fund

The National Disaster Management Institute (INGC) needs about $3.5 million to draft contingency plans, particularly against further flooding, over the next three years, according to its director, Silvano Langa, cited in "Noticias" on 30 September.

Speaking at the end of a seminar on "Lessons from the recent floods", Langa said the money would also be used to revise the national contingency plan, and to train communities in how to react to emergency situations.

Langa told "Noticias" he was optimistic that an unnamed foreign donor would be willing to finance these activities.

He also said that the INGC needs to contract a further 60 technical staff to ensure that the institution's delegations throughout the country can function properly.

He pointed out that the INGC, unlike its predecessor, the DPCCN (Natural Disasters Control Department), intended to be a lightweight body, employing a small number of well-trained and competent professionals.

Government plans for new floods

Foreign Minister Leonardo Simao, pointed out at the seminar that even if rainfall is normal, and does not reach the record levels of this February, the danger of flooding remains because the soils in much of southern and central Mozambique is still waterlogged. With the water table at a very high level, the capacity to absorb more water is limited.

The Minister announced that the government is to present, before the end of October, an emergency plan against possible flooding during the forthcoming rainy season.

Mozambique's National Meteorology Institute predicts levels of rainfall between normal and above normal for the period between October and March.

Agreement reached to privatise Maputo Port

The Mozambican authorities on 22 October signed an agreement with a consortium headed by the British Mersey Docks and Harbour Company that hands over the management of the port of Maputo to private hands for the next 15 years.

A company, the Sociedade de Desenvolvimento do Porto de Maputo (SDPM), will be formed between the consortium and the publicly-owned port and rail company, CFM.

The consortium will hold 51 per cent of the shares in the new company, which breaks down as follows: Mersey Docks and Harbour - 18.3 per cent; the Swedish company Skanska - 16.33 per cent; the Portuguese firm Liscont - 14.84 per cent; and their local partner, Mocambique Gestores - 1.53 per cent.

The other 49 per cent of SDPM is held by CFM. As in all the schemes whereby rail and port assets are leased out to private management, CFM will keep a stake of 33 per cent, while the other 16 per cent may be sold on to new local or regional "strategic partners".

Under the agreement the new company manages the port, but all the physical assets remain the property of the Mozambican state. Certain infrastructures, notably the oil and grain terminals, remain outside the agreement, and will still be managed by CFM.

The consortium intends to invest $57 million in the port, and further investment could happen later.

The ports and railways face a severe problem of overmanning, caused partly by changes in technology, and partly by the devastating effects of the war waged by apartheid South Africa against Mozambique up until 1992. Some of the lines sabotaged during the war (notably the Beira-Malawi line) have not yet been rehabilitated, and the deliberate apartheid tactic of forcing or enticing traffic away from Mozambican ports to South African ones drastically reduced the throughput of the port and rail systems.

Over the next five years the port and rail sector will shed the majority of its workforce. Out of the current figure of 17,875 port and rail workers only about 6,000 will stay in the sector. Maputo port will lose about 50 per cent of its current workforce of 3,000.

Contacts with the World Bank and the IMF about financing the restructuring of CFM had been under way since 1996. A total of $133 million was now available - $100 million in World Bank loans, $20 million from the Mozambican treasury, and $13 million from CFM's own resources. Much of this money will be consumed by the redundancy packages.

Money for fishing projects

The Mozambican government and the African Development Bank (ADB) have disbursed $11.25 million intended for the relaunching of artisanal fishing projects in three coastal districts of the northern province of Nampula.

Speaking in the provincial capital, Nampula city, Fisheries Minister Cadmiel Muthemba said that the money would be used in Angoche, Mogincual and Moma districts.

Fishing is the main source of income for the population of these districts, and relaunching this activity would guarantee them food security and jobs.

Semi-industrial and industrial fishing projects in the region have been either paralysed or are running deficiently owing to an alleged lack of funding. This has cost hundreds of jobs.

At least eight fishing companies operating in the region are either paralysed or running well below capacity.

Muthemba added that the government is also negotiating with donors so that similar projects can be undertaken in the northern coast of Nampula and in the neighbouring province of Cabo Delgado.

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