South32 has formally placed Mozal Aluminium on care and maintenance after six years of negotiations with the Mozambican government, Eskom and hydropower group Hidroeléctrica de Cahora Bassa failed to produce an affordable electricity supply agreement beyond March 2026.
The closure takes effect immediately, ending aluminium production at the 320,000-tonne-per-year smelter located near Maputo and triggering a restructuring process that affects approximately 5,000 direct employees and thousands more in indirect employment across Mozambique’s supply chain.
The outcome had been signalled for months. South32 announced in August 2025 that it intended to place Mozal on care and maintenance if a power deal could not be reached, and CEO Graham Kerr confirmed in February that the company had stopped procuring raw materials required for production beyond March — a step that in practical terms sealed Mozal’s fate before any formal announcement. The group had already taken an impairment charge of $372 million against the asset in its 2025 financial year results, reducing Mozal’s carrying value to $68 million. One-off costs to execute the care and maintenance transition, including employee separation payments and contractor termination arrangements, are estimated at $60 million, with ongoing annual care and maintenance costs of approximately $5 million.
The core sticking point throughout negotiations was electricity pricing. Mozal consumes a constant 950 megawatts of power — a volume that represents close to half of Mozambique’s total electricity output — and aluminium smelting economics require a power tariff that allows a facility to remain competitive against smelters in other parts of the world. The tariff offered to Mozal under the proposed new arrangement reached approximately $100 per megawatt hour — a figure Kerr described as more than double the rate paid by any comparable smelter in the Western world, and one that would have rendered Mozal commercially unviable from the moment it was accepted. Drought conditions in the Zambezi Basin compounded the problem by reducing hydroelectric output from HCB, increasing Mozal’s dependence on Eskom-supplied electricity at a moment when Eskom’s own tariff trajectory was moving in the wrong direction.
The structural complexity of the power arrangement added further friction. Mozal has historically received the bulk of its electricity from HCB, with Eskom supplying the balance when HCB was unable to meet full demand. The Mozambican government sought to restructure this arrangement so that power flowed directly from HCB to Mozal rather than being routed through Eskom — a configuration change that introduced new commercial and regulatory variables into negotiations that were already deadlocked on price. South32 has confirmed that the alumina it had been supplying from its Worsley Alumina refinery in Australia to Mozal will now be redirected to third-party customers at index-linked prices, removing the last commercial incentive for a rapid restart.
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The economic consequences for Mozambique are material. As noted by Fastmarkets, Mozal contributed approximately 4% of Mozambique’s gross domestic product and accounted for an estimated 21,000 indirect jobs through its multiplier effects on the local economy, in addition to its direct workforce of approximately 5,000. South32 holds 63.7% of the smelter; South Africa’s Industrial Development Corporation holds 32.4%; and the Mozambican government holds 3.9%. The Mozambican government has indicated that universal energy access by 2030 remains a national target, anchored by the development of Cahora Bassa and the planned Mphanda Nkuwa dam project — but neither initiative addresses the immediate economic void left by Mozal’s closure.
The Mozal shutdown is part of a broader pattern of electricity-driven industrial attrition across Southern Africa. Glencore-Merafe’s chrome venture issued thousands of retrenchment notices at two North West smelters in December 2025, having already cut 1,800 positions and closed 10 of 22 furnaces over the preceding four years due to unsustainable power costs. In January, the National Energy Regulator of South Africa granted Samancor and Glencore-Merafe a 35% tariff reduction in an attempt to stabilise those operations and protect remaining jobs — an intervention that Kerr noted was not made available to Mozal, despite the group’s argument that a commercially viable pricing arrangement for the smelter was achievable. South32’s Hillside smelter in Richards Bay operates under a ten-year negotiated electricity agreement with Eskom running to 2031, and produced 718,000 tonnes in 2024 — illustrating that long-term price certainty, rather than the cost of electricity alone, is the decisive variable for smelter viability in the region.
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