The former Portuguese colony has been hard hit by the AIDS epidemic, with an estimated 1.6 million of its 20 million people infected with HIV. Only a fraction of those requiring anti-retrovirals are on treatment.

The offer to build the plant was first raised by Brazilian President Luiz Inacio Lula da Silva during his 2004 official visit to Mozambique. Lula said he wanted drugs from the plant to be available to other African nations as well.

Brazil says the use of generic anti-retrovirals has cut its AIDS mortality rate in half.

"We are in a process of organizing the operational process for the installation of the ARV drug factory. Everything has already been agreed upon," Deputy Health Minister Aida Libombo told Reuters in an interview.

"There is no doubt about it. We are definitely going to install it," Libombo added.

INTERNATIONAL DONORS

Mozambique plans to raise funding for the plant from international donors. Libombo did not say when the factory would start production, and it is not clear whether any major pharmaceutical companies will be involved in the operation.

Brazil, a leading pharmaceutical manufacturer, will monitor quality and transfer technology to the plant, which would produce a range of drugs, including generic antiretroviral drugs (ARVs) to fight HIV/AIDS, Libombo said.

Mozambique, one of the poorest nations on the continent, is struggling to find the money to rebuild its dilapidated health-care system, which was neglected during a 17-year civil war that ended in 1992.

The Mozambican government said earlier this week that not enough people were coming forward to get ARVs. It said it planned to broaden its HIV/AIDS education programmes to encourage those infected to access the drugs.

An estimated 500 Mozambicans are infected with HIV each day.