KEY POINTS
- South32 flags $372 million impairment for Mozal.
- Mozal smelter’s future hinges on affordable electricity.
- Talks with power suppliers have yet to yield solutions.
South32 Ltd. says it may be forced to idle its Mozal aluminium smelter in early 2026, citing surging power costs and unreliable supply.
The Australia-, Johannesburg- and London-listed miner has spent months in talks with Mozambique’s government, hydropower producer Hidroeléctrica de Cahora Bassa (HCB), and South Africa’s Eskom in a bid to keep the plant running beyond the expiration of its current electricity agreement next March.
Mozal, in which South32 holds a 63.7 percent stake, has relied on Eskom to plug supply gaps when HCB falls short. But CEO Graham Kerr says discussions so far suggest the smelter won’t secure enough affordable power to remain viable.
South32 takes $372 million impairment
In response, South32 has halted further investment in Mozal, stopped pot relining, and released associated contractors. The company has also booked a $372 million impairment, slashing the smelter’s carrying value to just $68 million.
“We acknowledge the impact today’s announcement will have on our people,” Kerr said. “We are hopeful a workable solution emerges that enables Mozal to operate beyond March 2026.”
Power deal talks stall as costs rise
Under the existing arrangement, Mozal draws power from Eskom when HCB can’t meet demand. But Kerr says counterparty pricing expectations would make the smelter “internationally uncompetitive,” putting its long-term survival at risk.
Mozal, which has operated for 25 years, is also backed by South Africa’s Industrial Development Corporation with a 32.4 percent stake and the Mozambique government with 3.9 percent. Its potential closure would be a blow to Mozambique’s economy and to South32’s aluminium portfolio.
