Mozal aluminium shutdown cuts 30% of South32 output, triggers $117m charge

https://www.south32.net/news-media/media-image-gallery/operations-and-projects

South32 has recognised exceptional costs of USD 117 million after the closure of its Mozal aluminium smelter in Mozambique, as an unresolved power deal impasse with the Mozambican government keeps operations stalled.

The Mozal smelter, one of Africa’s largest aluminium producers with a 560,000-tonne annual capacity, entered care and maintenance on March 15 after negotiations over electricity tariffs failed. South32 has maintained that aluminium production is no longer commercially viable under the current power pricing structure, with electricity accounting for the plant’s highest operating cost.

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Mozal, a USD 2 billion facility requiring around 950 MW of continuous baseload power, has historically sourced electricity from Hidroeléctrica de Cahora Bassa (HCB) via South Africa’s Eskom network under a supply agreement that expired in March.

According to South32’s latest quarterly report, the USD 117 million charge includes “USD 33 million associated with severance payments and contract terminations, as well as accounting write-downs of USD 89 million related to raw materials, consumables, and inventory following the smelter’s transition to care and maintenance status on March 15.”

Operationally, the shutdown impacted FY2026 performance. Aluminium production declined 30 per cent year-on-year to 248,000 tonnes, compared with 355,000 tonnes a year earlier, while sales fell 22 per cent from 351,000 tonnes to 275,000 tonnes.

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Mozal’s shareholder structure comprises South32 (63.7 per cent), South Africa’s Industrial Development Corporation (32.48 per cent) and the Government of Mozambique (3.9 per cent).

Beyond the company’s financial impact, the suspension has wider economic implications. According to the International Monetary Fund (IMF), Mozal contributes about 4 per cent of Mozambique’s GDP and has generated over 20,000 jobs over the past 25 years, while directly and indirectly supporting over 4,000 workers before the shutdown.

The closure has also affected Eskom, which reportedly earned around ZAR 5 billion (USD 298.86 million) annually through electricity sales to the smelter.

Meanwhile, the Industrial Development Corporation (IDC) is evaluating the future ownership of Mozal aluminium. The agency is seeking advice to assess options including acquiring South32’s stake, facilitating a revised shareholder structure with strategic partners, or divesting its own holding based on the technical and commercial viability of the smelter acquisition.

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