The Government of Mozambique is seeking negotiations to prevent a permanent shutdown of the Mozal Aluminium Smelter. Owned by South32, Africa’s largest aluminium smelter, Mozal is to suspend operations from March 15, owing to unsustainable electricity costs. As the smelter is a key pillar of the country's economy, in addition to causing disruptions in aluminium supply across the world,  the deadlock is likely to cause massive unemployment.

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Government spokesperson Inocêncio Impissa stated that authorities would welcome the continuation of operations at the smelter. Open to discussions aimed at keeping the facility active, he said, “It would always be good to have Mozal or another major industry like Mozal… the government would be happy and would welcome it continuing to operate.” The government is also prepared to assist in negotiations with potential investors to ensure that the “infrastructure does not remain idle.”  

Factors like “the company itself, the owner of Mozal” etc. may have to consider “transferring the operation, or transferring the company, transferring shares and…responsibilities or ownership of a specific company such as this,” need to be considered as well.  

The suspension has already begun to affect the broader industrial ecosystem surrounding the smelter.  So far, at least 5 companies have shut down, while Beluluane Industrial Park reports many more companies will halt operations in the near future.   

Onório Manuel, Director-General of Mozparks, which manages the industrial park, stated, “We estimate there are around 25 companies providing goods and services to Mozal.” However, “most of these companies, given the suspension of activities at Mozal, are also considering taking similar action.”

The ripple effect could be significant. Along with Mozal’s employee strength of over 1,000 direct workers and around 4,000 indirectly, an estimated 4,000 additional jobs across supplier companies may be at risk due to the suspension. Referring to the scope of impending unemployment to follow, noted, “We are talking about countless jobs in companies linked to Mozal’s value chain, not necessarily at Mozal itself.”

The closure decision is linked to electricity pricing challenges. During a recent investor call, Graham Kerr, CEO of South32, said the only formal energy supply proposal from Eskom was close to USD 100 per MWh, which the company described as “unsustainable”. By comparison, fewer than 1 per cent of smelters outside China operate with power contracts exceeding USD 50 per MWh.

Despite the planned shutdown, South32 has indicated that operations could potentially resume if energy costs become viable, leaving the door open for future negotiations.

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