After months of prolonged struggle to secure a long-term power supply at Mozal Aluminium Smelter in Mozambique, South32 Limited (ASX/LSE/JSE: S32) has finally decided to halt its operations. By March 15, 2026, the company plans for the Mozambique smelter closure and subsequent care and maintenance, as at present, it is not economically sustainable to keep up with the operations once the existing supply contract expires.
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Image source: https://clubofmozambique.com/
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According to the company, negotiations were held with multiple stakeholders, including the Mozambican government, Hidroeléctrica de Cahora Bassa (HCB) and South Africa’s state-owned utility Eskom. Though several discussions had taken place to ensure adequate power supply, the pricing point was always a concern, and consequently, South32 broke over it. The situation was further complicated by dry weather conditions, which have reduced HCB’s ability to generate power.
Chief executive Graham Kerr said, “Throughout our engagements we emphasised that Mozal’s ability to continue operating depended on securing sufficient electricity at a price which allows the smelter to remain internationally competitive.”
In preparation for the planned suspension, South32 has chosen not to secure raw materials beyond March 2026. However, the company still continues to maintain a guidance of 240,000 tonnes for Mozal in FY2026, which reveals a positive production outlook
It is expected that the transition would incur one-off expenses of around USD 60 million. These expenses will largely involve workforce separation and the winding down of contractual obligations. Once the site is idled, ongoing maintenance expenditure is forecast at approximately USD 5 million per year.
The group holds a 63.7 per cent stake in Mozal Aluminium. South Africa’s Industrial Development Corporation owns 32.4 per cent, while the Mozambican state retains a 3.9 per cent interest. Situated near Maputo, the smelter produces primary aluminium that is sold both within Mozambique and into export markets.
The company also confirmed that alumina previously supplied from its Worsley Alumina refinery to Mozal will be redirected to external customers, with sales priced in line with prevailing market indices.
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