Tuesday, January 08, 2013

Whose development is it? An investigation into the Mozal smelter in Mozambique

In their latest report our friends at Jubilee Debt Campaign reveal that a highly profitable aluminium factory in Mozambique is paying just 1 per cent tax, despite half of the smelter being funded by foreign government’s to help ‘develop’ the country. The report estimates that for every $1 being paid by the smelter to the Mozambique government, $21 has left the country in profit or interest to foreign governments and investors. Much of the information in the report is newly in the public domain from documents released under the UK Freedom of Information Act.

The UK government are amongst those which funded the smelter, providing $53 million of loans from CDC, a fund which is supposed to support development, and guaranteeing $145 million of loans through UK Export Finance. The UK government has received $88 million in interest payments on the CDC loan, as well as the original loan being repaid.(1)

Other public bodies which have made money out of the smelter include the World Bank, European Investment Bank, and the governments of South Africa, Japan, France, Germany and Canada. In total the report estimates these public institutions have made over $120 million a year out of the smelter, eight times more than the $15 million a year received by the Mozambique government.

The main private investor in Mozal, BHP Billiton, has made an average profit of $114 million a year between 2005/06 and 2011/12,(2) over seven times more than the Mozambique government.

TJN is pleased to have been involved in the publication of this report.


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