South32 has announced plans to place its Mozal Aluminium operation on care and maintenance from March 2026 due to uncertainties around “sufficient” and “affordable” power supply.
The current power agreement is set to expire in March 2026 and ongoing negotiations have not yet yielded a viable solution for the facility's energy needs.
Despite continuous discussions with the Government of the Republic of Mozambique, Hidroeléctrica de Cahora Bassa (HCB) and Eskom, South32 has not been able to secure confidence in electricity provision for Mozal Aluminium beyond the expiration of the current agreement.
Consequently, the company has decided to curtail investment in Mozal, ceasing pot relining and standing down associated contractors from this month.
The lack of a reliable power supply is expected to significantly impact Mozal's production, with an anticipated output of approximately 240,000 tonnes for the fiscal year 2026.
This figure reflects the reduced number of operational pots due to the cessation of pot relining and operations only continuing until March 2026.
South32 has completed a carrying value assessment of Mozal, considering the increased uncertainty regarding future electricity supply.
This will lead to an impairment charge of $372m (£273.85m) for Mozal in the fiscal year 2025 (FY25) financial results, which includes $339m of property, plant and equipment, $7m of intangible assets, and $26m of raw materials and consumables.
This impairment, which brings Mozal's carrying value down to $68m, will be excluded from FY25 underlying earnings, following South32's accounting policies.
The company has previously expressed concerns over the future of the Mozal aluminium smelter due to potential power supply issues and the inability to secure affordable power prices beyond March 2026.
Mozal Aluminium, situated just 20km west of Maputo, Mozambique's capital city, represents a significant investment in the region.
The smelter, backed by a $2bn investment, was a pivotal project in Mozambique's economic recovery following a period of unrest.
South32 has a 63.7% stake in Mozal Aluminium, with the Industrial Development Corporation of South Africa and the Government of the Republic of Mozambique holding 32.4% and 3.9%, respectively.
Negotiations with HCB to renew a power tariff have been ongoing since 2019. Under the current agreement, South African utility Eskom is designated to supply power to Mozal when HCB cannot meet the smelter’s electricity requirements.
