MOZAL - ILRIG

1 MOZAL . a model of regional co-operation? Booklet produced by ILRIG (International Labour Resource and Information Group). MOZAL : A model of regional co-operation? International Labour Resource and Information Group P. O. Box 1213. Woodstock 7915. South Africa Tel: 021 - 447 6375. Fax: 021 - 448 2282. E-mail: Website: 1. MOZAL : A model of regional co-operation? MOZAL : A model of regional co-operation? co-operation? Published by ILRIG . P. O. Box 1213. Woodstock 7915. South Africa International Labour Resource and Information Group, Cape Town This material may be used by non-profit organisations. We do request that such users acknowledge ILRIG . No part of the booklet may be reproduced by any means, electronic, mechanical, photocopying, recording or otherwise for the purposes of profit without the prior written consent of the copyright holder.

2 First published in 2002. ISBN 0-620-29637-2. Proofreading: Ina Lawson Design and layout: Designs for Development Cover design: Amanda Arries Illustrations: Tanja Joubert Steelworkers' Humanity Fund, Third World Network Reproduction: House of colours Printed and bound: Logo print We thank Steelworkers' Humanity Fund (SHF) for financial support in researching and producing this booklet. Every effort has been made to contact and acknowledge copyright holders. However, should any infringement have occurred, ILRIG would like to be notified. We take this opportunity to offer our apologies. In the event of a reprint, these will be corrected. 2. Introduction Introduction Today there is great pressure on countries in This booklet tells the story of the biggest EPZ. Southern Africa and other parts of the world to of all in the southern African region: the fall in line with globalisation.

3 The supporters of Industrial Free Zone in Mozambique known as globalisation argue that if a country wants to MOZAL . MOZAL is an aluminium smelter succeed economically they must: located just 16 kilometres outside Maputo, the a) make strong efforts to attract foreign Mozambican capital. But MOZAL is not only a investors Mozambican initiative. It is linked to the b) increase production for export Maputo Corridor, a special economic zone which runs from Nelspruit in Mpumalanga to In line with attracting foreign investors and the Maputo harbour. Moreover, South Africa increasing exports, the South African govern- has other involvement in MOZAL . South ment has put in place Spatial Development African companies have invested millions in Initiativies (SDIs) and Industrial Development this initiative. The South African government Zones (IDZs).

4 SDIs and IDZs are special has also put a considerable amount of economic zones where investors are offered a resources into MOZAL . And many South number of incentives. But special economic Africans have been employed in MOZAL . zones are nothing new. They have been in place Political and industrial leaders in South Africa in a number of countries around the world for have praised MOZAL . For example, Brian about 30 years. By the turn of the century more Gilbertson, Chairperson of BHP Billiton has said than 27 million people were employed worldwide of MOZAL : in special economic zones, often called export I can think of no better illustration of the processing zones (EPZs) or Free Trade Zones. industrial Renaissance of the African continent. A number of countries in southern Africa have also put EPZs in place.

5 These include MOZAL , then, is an important issue not only for Zimbabwe, Namibia and Mauritius. South South Africans but for all people in the SADC. African companies, as well as the South African region. We hope this booklet will help trade government have an interest in some of these unionists and other activists to debate EPZs. initiatives like MOZAL and come up with alternatives that address the needs of the working people of the region, not the share- THE MAPUTO CORRIDOR. holders of global corporations like BHP Billiton. MO AMBIQUE. GAUTENG MPUMALANGA NELSPRUIT. Komatipoort PRETORIA. N4 Witbank INDIAN. Structure of the booklet OCEAN Our booklet is divided into five sections. In JOHANNESBURG MAPUTO. SWAZILAND section one we provide a brief history of MOZAL . Section Two will look at present and future plans for the initiative.

6 In Section Three 1. 3. MOZAL : A model of regional co-operation? we will present the claims made by those who 5 we will offer some concluding remarks about argue that MOZAL is a success. In section 4 MOZAL and its implications for development we will present some criticisms of MOZAL that and for workers in South Africa and the SADC. have emerged from various quarters. In Section region. 1 Historical background MOZAL is an initiative driven by two concerns. Hillside in KwaZulu-Natal is one of the largest Firstly, Mozambique is one of the poorest aluminium smelters in the world. But for countries in the world. More than 70% of the investors, a Mozambican smelter could Mozambican population lives below the poverty potentially offer even lower cost production line. The average income (GDP per capita) per than South MOZAL initiative sought person in Mozambique is about $US230.

7 This is to increase economic growth through making a far less than South Africa's figure of $3 160. partnership between the Mozambican (The average or Sub-Saharan African countries government and a major foreign investor like is $US500.) By attracting foreign investors to BHP Billiton. These types of partnerships an initiative like MOZAL the Mozambican between governments and private companies government hoped to increase economic are often called Public-private partnerships or growth and provide jobs for local citizens. The PPPs. PPPs are an important component of government hoped that a success at MOZAL globalisation. They aim to provide private would prove that business ventures could companies with more opportunities for succeed in Mozambique. Secondly, MOZAL investment in sectors which were previously run offered opportunities for big companies by government.

8 PPPs also put pressure on involved in the mining and metals industry. governments to operate more like a business There is considerable experience of aluminium rather than a provider of services. smelting in southern Africa. Alusaf, located at Historical background to What is GDP per capita? poverty in Mozambique GDP stands for Gross Domestic Product. Mozambique is not a poor country by The GDP of a country is the value of all accident. The country was colonised by goods and services produced in a country Portugal for centuries, only gaining in a year. per capita means per head. independence via an armed struggle which So the GDP per capita is the total value of finished in 1975. Colonialism in all goods and services produced in a year Mozambique was very harsh. Millions of divided by the total population of the Mozambicans were forced off their land.

9 Country. Many were then forced to work on the colonialists' plantations. Others came to 42. Section 1: Historical Background Secondly, the Industrial Free Zone included the South Africa to work on the mines. During formation of MOTRACO, the Mozamibque colonialism few Mozambicans had a Transmission Company. MOTRACO brought chance to gain access to education or together the South African parastatal, Eskom, social services. and electricity utilities from Swaziland and MOTRACO, MOZAL . Once the country gained independence, offered the cheapest electricity of any there was a civil war which lasted from the alumunium smelter in the world. Electricity is the early 1980s until the early 1990s. The war biggest cost for operating an aluminium smelter. was fought between the Mozambique Resistance Movement (Renamo) and the Thirdly, labour costs in Mozambique are very Mozambican government.

10 Renamo was low. The minimum wage in Mozambique was heavily supported by the apartheid regime roughly R225 per month. The government and in South Afirca in the 1980s. More than one the union were both prepared to ensure inves- million Mozambicans lost their life during tors of low wages and a peaceful workforce. This the years of the conflict (from 1980-1993). was put on paper in the Project Labour Agree- In addition, the war destroyed much of the ment (PLA). The PLA, signed by the government, country's infrastructure such as roads, employers and the construction union in bridges, schools and clinics. Mozambique (SINTICIM) outlawed strikes. Attractions for investors Excerpt from the MOZAL Project Labour To develop the PPP, the Mozambican Agreement , a government framework, government offered a number of attractions.