South32 to mothball Mozambique smelter in March as power talks collapse

Australia’s South32 said on Tuesday it will place the Mozal aluminum smelter in Mozambique under care and maintenance by March, incurring a $60 million one-off cost, after failing to secure a power deal with the government.

Negotiations between the Perth-based firm and Mozambique’s government and power suppliers have been going on for several years to reach an agreement for the smelter’s energy-intensive operations.

“The parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB,” said South32’s CEO, Graham Kerr, referring to hydroelectric producer Hidroeléctrica de Cahora Bassa.

Under the current power-supply deal, when primary power provider HCB is unable to meet all of Mozal’s electricity requirements, South African utility Eskom will step in.

As the deal is due to expire by March, South32 has not procured raw materials required to sustain operations beyond that period, it said.

Producing aluminum is energy-intensive, making affordable power supply a key concern for aluminum producers such as South32.

The Mozal smelter, in which South32 holds a 63.7% stake, has been a significant contributor to the company’s aluminum output, accounting for just over 29% of its total aluminum production in fiscal 2025.

South32 had flagged a $372 million impairment for the Mozal smelter in its fiscal year 2025 results, reflecting the financial impact of the anticipated shutdown.

Its shares ended the day 2% lower, a few minutes before the update was made public.

(By John Biju; Editing by Janane Venkatraman and Harikrishnan Nair)