MAPUTO—South32 has confirmed that its Mozal aluminum smelter, a cornerstone of Mozambique’s industrial sector, will be placed on care and maintenance next month as negotiations for a viable electricity contract hit a terminal deadlock.
Despite last-minute diplomatic manoeuvres by the Mozambican government to rescue the facility, the Perth-based miner revealed that the window for operational continuity has closed, marking a significant blow to the regional manufacturing landscape.
The decision follows a multi-year struggle to secure affordable power beyond the current contract’s expiration in March 2026. Severe drought has crippled the hydroelectric output of Hidroeléctrica de Cahora Bassa (HCB), while attempts to secure competitively priced backup supply from South Africa’s Eskom proved unsuccessful.
The closure is expected to impact approximately 4,000 direct and contract positions, representing nearly one-third of Mozambique’s manufacturing workforce, and could ripple through the economy to affect over 20,000 indirect jobs.
“Unfortunately, the reality is we’re running out of things in the next week or so, of pitch and coke, and even if we found a power contract today, that could not be delivered to us in time to keep the plant running,” said Graham Kerr, CEO of South32, during an interim earnings call on Thursday. “So we’re definitely heading for care and maintenance.”
The operational wind-down comes despite a robust half-year financial performance for South32, which reported underlying earnings of $435 million for the six months ending December 31. This result exceeded analyst estimates of $386.6 million, buoyed by a recovery in manganese production and favorable pricing for copper, silver, and aluminium.
Consequently, the group hiked its interim dividend to 3.9 cents per share, signaling to investors that the broader portfolio remains resilient even as it excises the troubled Mozambican asset.
Strategically, the move to care and maintenance rather than a permanent closure preserves the slim possibility of a future restart should energy conditions improve. However, Kerr cautioned analysts that reviving a dormant smelter is a capital-intensive engineering challenge that differs vastly from reopening a mine.
For now, the alumina destined for Mozal from the Worsley refinery in Australia will be redirected to the Middle East, further shifting global supply chains as European markets brace for a deficit of “green” aluminium previously sourced from the hydro-powered facility.
In contrast to the grim outlook in Maputo, the group remains optimistic about its South African Hillside smelter. Benefiting from a power agreement that runs until 2031 and a utility provider in Eskom that has shown greater flexibility on tariffs and renewable integration, Hillside continues to serve as a critical supplier to the domestic market.
For Mozal, however, the lack of a competitive energy solution has turned the page on a decades-long industrial chapter, leaving the state to weigh the permanent loss of one of its largest export earners against the high cost of energy subsidies.
