Job Creator

What was behind BHP Billiton’s initial decision to invest in Mozambique?

At that time, the Mozambican government was looking for foreign investors to get the economy moving in the wake of the civil war. At the same time, BHP Billiton was looking to expand its aluminum business. It therefore made perfect sense for both parties to commit to this large investment. Obviously, there were concerns at the time because ours was the first foreign investment in many years and the largest in Mozambique of the previous 30 years. There was a willingness on the part of the government to work with a foreign investor, although there were a number of challenges involved in being an early entrant.

How would you characterize the role that Mozal has played in developing Mozambique’s industrial sector?

The project was realized in two phases in what became a more-than $2 billion investment. Since the early days of the project, there was an undertaking to develop local industry. The industrial park adjacent to Mozal today had not previously existed, and around 12 to 15 companies are providing services to Mozal that have developed over the years. Locally, Mozal spends between $120 million and $180 million a year in the service industry. The Mozal Linkages Program launched in the early days still focuses on developing local industry. The program concerns mentorship and ensures the sustainability of contractors and people that provide services to us. It is important that these companies and individuals sustain their competitiveness. Over 100 companies have completed the program and the feedback we have had suggests that its graduates over the last three years have displayed, on average, a 34% increase in turnover. Our aim is to help them grow their business beyond Mozal, and ultimately the ideal of sustainability underpins the program. And when we consider the job creation aspect, Mozal has roughly 1,200 directly employed staff and around 600 to 800 contractors. Approximately 6,000 to 7,000 people benefit from Mozal in total.

What are the major challenges that you have faced investing in Mozambique, and how have you overcome them?

One of the challenges that Mozal faced in the early days—and that some of the new players face—is infrastructure. There needs to be a match between the government’s prioritization of infrastructure and actual projects. This is being tackled by a team within the government tasked with overcoming such specific challenges. Part of Mozal’s project entailed investing in infrastructure, because we knew that was not a priority at the time from a governmental perspective. One such example was the construction of a bridge near our facilities, which positively served to bring the project online, swiftly enabling full-capacity operation. Another important factor for us was the availability of a skilled workforce. After so many years of internal strife, there were no large operators in the country, which meant a sore lack of skills. That was also built into Mozal’s plan in terms of up-skilling people. In terms of financing, much has been done to reduce the level of perceived risk. Indeed, structures were put in place to address those questions, including an audit framework, to assure lenders that they would get a return on their investment.