Damming the Zambezi for Aluminum: Proposed Dam a "Power Play" to Gain Control of Upstream Dam?

Ryan Hoover
Monday, October 1, 2001

For a couple of weeks in late September, sooty plumes of black smoke billowed from the stacks of the Mozambique Aluminum (Mozal) smelter on the outskirts of the Mozambican capital, Maputo. A year after the plant opened, a cooling tower in the treatment plant corroded and gave way, spewing sulfur dioxide and toxic fluoride into the air. A company official admitted that fluoride was in fact being released, but was quick to claim, "While the black plume now issuing from the top of the treatment plant is unsightly, it is not dangerous."

Anabela Lemos of the Mozambique environmental group Livaningo is skeptical. "I don’t believe it’s not dangerous," she says, "If after only one year of operation they have suffered such a breakdown, what will happen in the future?"

Through much of its recent history, Mozambique has been a Cold War battleground, with Western–backed guerrilla forces carrying out a horrific destabilization campaign against the country’s Marxist government. Peace finally came to the country in the early 1990s following the collapse of the Soviet Union and the fall of South Africa’s apartheid regime, which played a key role in instigating and protracting the war.

Peace (and the ruling party’s disavowal of Marxism) opened the doors to a bevy of foreign companies eager to exploit Mozambique’s resources, among them coal, titanium, and natural gas. Mozambique has been keen to accommodate these ventures in the hopes that it would improve its desperately poor population’s quality of life. It is an open question, however, if the benefits derived from these schemes will be adequate compensation for their impacts.

One of the larger recent foreign investments is the Mozal smelter. A consortium led by the multinational mining giant BHP–Billiton developed the Mozal project with financing from the World Bank’s private–sector lending arm, the International Finance Corporation (IFC). Eventually, Mozal hopes to produce 500,000 tons of aluminum ingots annually at the plant from raw alumina that is shipped to Mozambique from Australia’s Worsley mine, which is also owned by BHP–Billiton.

Why ship raw alumina across the Indian Ocean to a country almost 5,000 miles away? The answer lies in the fact that electricity in Mozambique is very cheap. The Mozal smelter already uses 450MW of electricity, and if a planned second phase is completed it will use a total of 900MW. This amount dwarfs the total amount of electricity used by the entire rest of the country (307MW). With such enormous amounts of electricity required (and with a glut of primary aluminum on the market in recent years), the smelter’s profitability therefore depends on it obtaining cheap electricity. Terms for the sale of electricity to Mozal are confidential, but according to a 1999 report in Africa Energy & Mining, the cost was pegged to the price of aluminum and amounted to less than $0.02 KwH, cheaper than anywhere in the world outside of Canada.

Surprisingly, Mozal’s electricity does not come from the giant Cahora Bassa Dam in northern Mozambique, which has a capacity of 2,075MW. Instead, the smelter receives its power from Motraco, a consortium comprised of electricity utilities from South Africa (Eskom), Swaziland (SEB), and Mozambique (EDM). Analysts suggest that the Portuguese company that owns and operates Cahora Bassa (known by its Portuguese acronym HCB) was cut out of the Motraco consortium to supply Mozal in part because of its past conflicts with Eskom over rates charged for the dam’s electricity. Another reason is thought to be Mozambique’s discontent with Portugal’s continued ownership of Cahora Bassa, a growing irritant that is having surprising side–effects: Mozambique is reportedly considering the closure of its embassy in Lisbon, in part over the Cahora Bassa issue.

As BHP–Billiton and the IFC gear up for construction of the second phase of the smelter, they have made little secret that they will need to locate additional power supply. Instead of now negotiating electricity from the existing Cahora Bassa, however, BHP–Billiton and the Mozambican government have proposed to build a new dam, named Mepanda Nkuwa, 70 kilometers downstream from Cahora Bassa on the Zambezi River. This proposal has prompted some observers to question whether the new dam is not actually a ploy to wrest control of Cahora Bassa from the former colonial powers.

Dam’s Serious Impacts

This political maneuvering could come at a heavy social and environmental price. The proposed US$1.2 billion Mepanda Nkuwa Dam will displace some 2,000 people from its 100 km2 reservoir. These people are primarily pastoralists who are struggling to rebuild their herds, which were decimated during the protracted civil war. Thus far, only an "informal" resettlement program is planned for these people, and proposed development programs involve little more than the provision of additional water supply.

People living downstream of the dam will also be affected. The completion of the Cahora Bassa in 1974 prevented seasonal flooding on the Zambezi and changed the behavior of people living near its floodplain. Before the dam’s construction, they annually migrated onto the floodplain to farm and then moved back to safety before the floods arrived. In recent times, infrequent flooding forced communities to farm the flood zone because formerly productive farmland is now marginal without the floods" regular deposits of silt. These new settlement patterns mean that hundreds of thousands of people are literally in harm’s way when the big floods inevitably spill over upstream dams. The Mepanda Nkuwa Dam could exacerbate this problem by further regulating the Zambezi’s flow. The dam, although situated on the mainstem of the Zambezi, will capture the flow of the Luia River, one of the three most important tributaries on the Zambezi below Cahora Bassa Dam.

Mepanda Nkuwa will also most likely further decrease the amount of sediment carried by the river. The upstream dams of Cahora Bassa and Kariba have already caused drastic environmental changes downstream by trapping this silt, especially affecting the ecologically sensitive Zambezi delta with its large mangrove swamps.

As the recent breakdown at the smelter illustrates, however, the dam is not the only component of the project with big environmental and social problems. According to the Environmental Impact Assessment (EIA) for the smelter, the plant emits 26 times more sulfur dioxide than other smelters, because it does not have a "wet scrubber" installed, a standard component in many modern smelters. Interestingly, the EIA does not recommend the installation of a wet scrubber because ambient levels of sulfur dioxide in the area before the smelter’s construction were deemed "not a problem."

Labor disputes have also dogged the project. At press time, more than 300 Mozambican workers had walked off the job to protest low wages and safety concerns; they were subsequently fired. Mozambican middle managers reportedly receive only a third of what is paid to Australian and other foreign middle managers at Mozal, and the Mozambican workers hired to build the plant received less than $50 per month.

Efforts by the NGO Livaningo to get more information on these and other concerns have thus far proven fruitless. Their meetings with Mozal representatives are frequently cancelled, representatives are unable to answer questions, and a general air of secrecy surrounds the plants operations. According to Lemos, Livaningo is increasingly convinced that the Mozal plant is a menace. "We believe any continued investment in the second phase of the Mozal smelter will result in major problems in the areas of public and environmental health for us in the future," she says.

Mepanda Nkuwa Dam may have a life even without the smelter, however – as a way to meet Mozambique’s growing energy demand. Livaningo disagrees that Mepanda Nkuwa is the least–cost alternative for meeting demand, however. "If Cahora Bassa Dam was better managed," says Lemos, "there would be no need for another dam to be built." A proposal to add an additional 600MW power plant to Cahora Bassa would provide enough electricity to power a second phase at Mozal with plenty of power to spare.

A source working within the Mozambican energy sector believes development of the nation’s natural gas reserves is the most viable option for providing power to the vast majority who are currently without access to the power grid. This energy economist believes that it would be cheaper to use natural gas for power generation in these isolated locales than it would be to extend transmission lines from hydropower plants. These pockets of "small" demand far from the main power grid might also be best served by small–scale renewable projects, including biomass, solar, or wind.

The Mozambican government is making steps in this direction. Recent legislation encourages power co–generation to facilitate the electrification of smaller cities and towns, recognizing it as the most efficient way to provide power to the 95% of Mozambican citizens who are currently without electricity. It remains to be seen, however, if they will be similarly active in protecting the Zambezi from further damming.