Solved Case Analysis: BHP Billiton and Mozal B By Patricia H. Werhane, Laura P. Hartman, Jenny Mead

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Description

BHP Billiton began construction of Phase 1 of the Mozal aluminum smelter in 1998. Because of the challenges that the community presented, BHP Billiton and its partners created the Mozal Community Development Trust (MCDT), which worked to improve the infrastructure, social services, and health care of the community. During the two construction phases, the project contributed more than USD160 million to the local economy, principally through the employment of Mozambican laborers and the use of local contractors and suppliers. The MCDT implemented malaria prevention and HIV/AIDS prevention program, made improvements to the health clinics and schools, instituted work force training and development, and supported small and medium enterprises. In addition, it initiated projects aimed at raising the level of education of the country’s engineers and technologists to international standards. In 2002, when both phases of the Mozal smelter were complete, the World Bank’s International Finance Committee (IFC) stated that Mozal had set a precedent for future projects in Mozambique. Mozal, said the IFC, “illustrates the clear advantages of incorporating environmental and social issues early in a project, and reflects the approach and procedures IFC has been refining and putting in place to deal with environmental and social issues.” For BHP Billiton, the Mozal experience demonstrated that, when establishing a major resource project, it made good business sense to invest not only in the venture but also in the host community.

Publishing Authority:

Darden Business Publishing – University of Virginia

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