South32 to put Mozal aluminium smelter on care and maintenance due to electricity supply issues

South32 said its Mozal Aluminium facility, the biggest industrial employer in Mozambique with over 2 500 staff, will be put on care and maintenance when its electricity agreement expires at the end of March 2026.

Over 2 500 employees and contractors were employed at Mozal in 2024, the group's integrated report shows, and an estimated additional 21 000 jobs were created through multiplier impacts on the economy. South32’s share price plunged 5.83% to R33.41 on the JSE early Thursday morning.

South32 said in a notice that it had continued to engage with the Mozambique government, Hidroeléctrica de Cahora Bassa (HCB), and Eskom on securing additional electricity, since an earlier announcement last month - it has been trying to secure an agreement for over six years.

South32 also operates the Hillside smelter in Richards Bay, with both smelters supplied with alumina that is mostly mined and imported from Australia. The impact on the Mozambique economy stretches beyond the direct workforce at Mozal, as the facility supports not only smelting operations but also downstream industries and infrastructure development.

“These engagements do not provide confidence that Mozal will secure sufficient and affordable electricity beyond March 2026. As a result, we will limit investment in Mozal, stopping pot relining and standing down associated contractors starting this month,” the global mining group said. South32 would incur an R6.53 billion impairment as a result.

Historically, most of the electricity for Mozal has been generated in Mozambique by a hydro-electric power generator, Hidroeléctrica de Cahora Bassa (HCB). HCB is owned by the Mozambique government.

Under the agreement, electricity from Eskom is supplied to Mozal when HCB is unable to meet all of Mozal’s electricity requirements. HCB recently indicated that drought conditions had the potential to impact its capacity to deliver sufficient hydro-electric power to Mozal, which had increased the uncertainty regarding future electricity supply to Mozal.

“Without access to sufficient and affordable electricity, we expect that Mozal will be placed on care and maintenance at the end of the current agreement,” it said.

Mozal's 2026 financial year production was expected to be about 240 kt (South32 share), reflecting fewer pots in operation as pot relining stops and operations continue only to March 2026.

Mozal produced 318 000 tons of aluminium in 2024. Hillside, which is Eskom’s biggest industrial customer, produced 718 000 tons of aluminium last year.

A carrying value assessment of Mozal had been completed, and as a result, South32 would recognise an impairment of $372 million for Mozal with its results for the 2025 financial year.

This included $339m of property, plant, and equipment, $7m of intangible assets, and $26m of raw materials and consumables.

“The impairment reflects our assessment that the most likely scenario is for Mozal to operate until the end of the current electricity supply agreement and be placed on care and maintenance in March 2026. The impairment reduces Mozal's carrying value to $68m,” the group said.

Hillside’s 10-year negotiated electricity price agreement with Eskom is set to run until 2031.

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