KEY POINTS
- South32 plans to idle the Mozal smelter in 2026.
- The company cites high tariffs and power shortages.
- Output could fall by one-third before the shutdown.
South32 Ltd. is preparing to idle one of Africa’s largest aluminum smelters after prolonged talks with Mozambique’s government failed to secure a viable power deal. The Australian miner said Thursday it will mothball the $3.72 billion Mozal facility when its current electricity supply agreement expires in March 2026, warning that soaring tariffs could render the operation globally uncompetitive.
Mozal smelter faces uncertain future
The diversified miner, which has been negotiating for months with the government, hydroelectric producer Hidroeléctrica de Cahora Bassa (HCB), and South African utility Eskom, said affordable electricity remains out of reach. Chief Executive Officer Graham Kerr noted the tariffs proposed by counterparties would push production costs to levels that no longer make commercial sense for the plant.
As a result, South32 will scale back investment, halt activities such as pot relining, and prepare for care and maintenance. The company has already flagged a $372 million impairment for the smelter in fiscal 2025 and warned of reduced output, falling from an estimated 355 kilo tons in 2025 to 240 kilo tons in 2026.
South32 keeps door open to last-minute deal
According to Reuters, while the decision to idle Mozal appears likely, Kerr said the company is still hopeful of striking a cost-effective agreement to keep the operation running. “We are hopeful a workable solution emerges that enables Mozal to operate beyond March 2026 and maintain its substantial contribution to Mozambique,” he said.
Mozal’s closure would deal a blow to Mozambique’s economy, where the plant is a major employer and exporter. The facility, which relies on HCB for most of its power and Eskom as a backup, has also faced disruptions from political unrest, including nationwide protests last December that disrupted output.
