Europe seeks substitution as Mozal smelter pulls the plug

On December 16, South32 announced the shutdown of Mozambique’s Mozal aluminium smelter in 2026 due to the government’s failure to acquire a new power deal. Denting the global aluminium supply by pulling back its 560,000-tonne annual capacity, the smelter leaves Europe grasping for replacements. 

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Trade Data Monitor reports that in the first 10 months of 2025, the smelter shipped the EU customers almost 430,000 tonnes, securing the top position in supplying almost 20 per cent of primary aluminium to the bloc. Internationale Nederlanden Groep (ING) had made a prior estimate of a 200,000-tonne deficit in the 2025 international aluminium market. As the shutdown is following soon after the Century Aluminum Company’s smelter outage in Iceland, it is worsening Europe’s position and widening the gap of its 9-million-tonne annual demand.

ING analyst Ewa Manthey predicted, “We are expecting a deficit of around 600,000 tons now for next year,” and added, “Europe is likely to fill the Mozal gap mainly via higher imports from Canada and the Middle East.”

On the other hand, prices will keep climbing with the implementation of EU’s new Carbon Border Adjustment Mechanism (CBAM) that will impose carbon tax on imported aluminium from January 1, 2026. Moreover, options will be further squeezed, owing to the 50,000-tonne cap of Russian imports February 26 to December 31.

The three-month aluminium on the London Metal Exchange (LME) rose 0.5 per cent at an estimated USD 2,880 per tonne, near 3-year high of USD 2,920 hit on November 3 as well as December 5, and thereafter, a 10-month-high of USD 340 per tonne at the beginning of and was last at USD 326.

Ross Strachan, the CRU head of aluminium raw materials, observed that Mozal’s closure has flipped its 200,000-tonne surplus aluminium forecast to a deficit, with Gulf exporters to attempt bridging the gap, eyeing the high EU premiums of USD 326 per tonne according to the latest update. 

Also read: Mozal aluminium operations to be suspended owing to power deal deadlock