As of August 2025, South32, a mining and metals company, has made an announcement of its plan to place the operations of Moral Aluminium on care and maintenance from March 2026.
Back in July 2025, Australia's South32 announced plans to mothball its Mozal Aluminium Smelter in Mozambique, citing an inability to secure affordable and reliable electricity beyond the expiration of its current power supply agreement in March 2026. The company has flagged a USD 372 million impairment charge, reflecting the growing uncertainty over the smelter's long-term viability.
Due to the uncertainties around "significant" and "affordable" power supply, the plan for Mozal Aluminium's operation will be under care and maintenance. With the existing power supply agreement expiring in March 2026, ongoing negotiations have so far failed to secure a sustainable energy solution for the facility.
Despite six years of negotiations with the Mozambique government, Hidroeléctrica de Cahora Bassa (HCB) and South African utility Eskom, no agreement has been reached on a sustainable electricity tariff.
As a result, the company will scale back investment in Mozal, halting pot relining activities and releasing related contractors effective this month. The anticipated power supply constraints are projected to reduce output to around 240,000 tonnes in FY2026.
The projected output accounts for the lower number of operational pots following the halt in pot relining, with production set to continue only until March 2026. South32 has also conducted a carrying value assessment of Mozal in light of heightened uncertainty over future power availability.
This is expected to result in an impairment charge of USD 372 million for Mozal in FY2025, comprising USD 339 million in property, plant and equipment, USD 7 million in intangible assets and USD 26 million in raw materials and consumables.
The impairment reduces the firm's carrying value to USD 68 million and will be excluded from FY2025 underlying earnings in line with South32's accounting policies. The company has previously raised concerns about the smelter's future, citing unresolved power supply challenges and the absence of affordable tariff agreements beyond March 2026.
Located 20 km west of Maputo, Mozambique's capital, the firm stands as a significant regional investment, with its USD 2 billion development playing a key role in the nation's post-unrest economic recovery. South32 holds a 63.7 per cent stake in the firm, while the Industrial Development Corporation of South Africa owns 32.4 per cent and the Government of the Republic of Mozambique holds 3.9 per cent.
Moreover, South32 has flagged a potential impairment in its FY2025 financial results amid deepening uncertainty over the Mozal Aluminium smelter's long-term electricity supply. The company cited ongoing delays in contract negotiations and worsening drought conditions affecting HCB's hydro-electric generation capacity, which undermines confidence in securing reliable power beyond March 2026. Consequently, South32 is reviewing Mozal's FY2026 production guidance.
Also read: Mozal aluminium output climbs 12%, but power uncertainty casts shadow on future
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