Mozambique smelting profits should not fill foreign coffers, say campaigners

Mark Tran

UK government and World Bank among investors accused of benefiting disproportionately from lucrative Mozal smelter

Tax campaigners are calling on Britain, the World Bank and private investors to return "excessive" profits from a flagship aluminium smelting project in Mozambique started as part of a recovery programme after the country's civil war in the early 1990s.

According to a report by Jubilee Debt Campaign in the UK, the Tax Justice Network and Justica Ambiental (Friends of the Earth Mozambique), the Mozal smelter – the biggest private-sector project investment in the former Portuguese colony – has benefited foreign interests much more than the people of Mozambique.

The report calculates that foreign investors, governments and development banks have received an average of $320m (£199m) a year from the smelter, in contrast to the Mozambique government's $15m. In other words, for every $1 paid to the Mozambique government, $21 has left the country in profit or interest to foreign governments and investors.

"It is scandalous that a project with so much international development funding has yielded large profits for foreign governments and multinational companies, but very little for Mozambique," said Tim Jones, policy officer at Jubilee Debt Campaign. "The UK government, World Bank and others should hand their excess money back to the people of Mozambique, and support a renegotiation of the amount of tax the smelter pays."

The Mozambique government and development institutions saw Mozal as a catalyst for foreign investment to rebuild a shattered country. The project, a smelting facility to produce aluminium for export, was the first major foreign investment project in the country.

To attract foreign investors, the Mozambique government exempted Mozal from taxes on profit and VAT, levying only a 1% turnover tax, while allowing all profit from the smelter to be taken offshore. Continue reading here.