BHP BILLITON AND MOZAL (A) Case Solution

The aluminium smelter extracts aluminium from its ores through various metallurgy techniques. Aluminium is not found in free-state whereas its most common ores or minerals are silicate and oxides of aluminium. Furthermore, there are various techniques of extracting the metal from its minerals.

Mozambique, being one of the poorest countries of the world, was making a slow and difficult transition to a market-oriented economy. There were a number of problems that confronted development and growth of businesses. Some of the issues that hampered growth and development are weak financial, legal, safety, health issues and community institutional structures and capacity. Mozambique lacked the skilled labour force that was required for such projects as the aluminium smelter. Moreover, the country was plagued by serious environmental and health threats that prevented foreign skilled labour and managers to come and help improve the situation. All of the above mentioned issues posed serious threats to the implementation of the aluminium smelter project by BHP Billiton.

The main issues faced by BHP Billiton revolve around the feasibility of the project in western Mozambique. Both company’s strategic and ethical policies and health and community issues of Mozambique posed strong threats to the feasibility and success of the project. Hence, the question arises whether the project is feasible given the social, political, health related and infrastructural challenges of Mozambique.

In the midst of all the threats, the aluminium smelting project was launched in two phases; first phase in 1998 while phase-2 was implemented in 2001. Both the phases were successful in their implementation as each was completed ahead of time and under the allocated budget. Moreover, the smelter was cost-efficient. More importantly, the smelter project beautifully addressed each issue of the community, thus, being consistent with the company’s mission of committing with the community. The challenges faced by the aluminium smelter project fall into following three categories: health and safety related, community related and socioeconomic issues. One by one, each category will be explored for main concerns followed by a synapsis of strategy adopted and initiatives taken by BHP Billiton.

Firstly, malaria and HIV/AIDS were prevalent in Mozambique, and the influx rate was increasing, which had debilitating effects on the community from which the smelter project would derive its work force. Furthermore, on the one hand, the number of skilled labour force was limited while, on the other hand, prevalence of malaria and HIV/AIDS posed a threat to attracting foreign skilled labour and managers. In order to combat the poor health conditions of Mozambique, BHP Billiton conducted preventive as well as educative programs. For example, under the malaria prevention program, the company conducted spraying program, educated people against infection and provided netting materials, etc. to help them avoid contract with malaria. The program reduced the infection rate from 85% to 18.6%. Similarly, the company also undertook HIV/AIDS program, maternity clinic and environmental initiatives for the betterment of the community and showed positive results.