With power price and purchase agreements to power its Mozal Aluminium smelter in Mozambique in limbo, diversified metals producer South32 CEO Graham Kerr says the company’s sister operation in South Africa – the Hillside Aluminium smelter – is performing at and over nameplate capacity, despite lingering loadshedding that affects some of South Africa’s bigger industrial power consumers.

“Hillside continues to test its maximum technical capacity,” he states, adding that the smelter’s production is expected to be within the 720 000 t/y ballpark across both financial year 2026 (ending June 30, 2026) and 2027 (ending June 30, 2027).

Hillside “continues to push the envelope” of the 720 000 t/y production capacity by being more efficient, South32 Southern Africa and Colombia COO Noel Pillay tells Mining Weekly, adding that the plant’s teams have found innovative ways to extend plant efficiencies.

“Hillside has been, for the longest time, at nameplate capacity and it’s been arguably one of our most stable, predictable operations in the [South32] portfolio,” he says.

The only issue getting in the way of Hillside’s performance is loadshedding. However, Pillay notes that the ability for Eskom to periodically drop Hillside’s electrical supply is contractually built into South32’s power supply contract, with Kerr adding that although the loadshedding is an impediment, South32, and more specifically Hillside, has an “outstanding relationship” with Eskom.

While South Africa’s household electricity consumers have not faced loadshedding since mid-May, many of the country’s bigger power consumers, such as heavy industry, still face sporadic loadshedding as grid deficits occur as load outpaces generation.

“Contractually, [Eskom] can drop one of our lines for up to two hours a week. They don’t do that every single week, but as and when it is needed, they exercise that contractual right,” says Pillay.

Nonetheless, Kerr adds, “I could not give the relationship with Eskom a bigger tick than what it has today,” adding that he is in contact with the Eskom CEO “all the time” and their relationship is one in which both parties “recognise the value of each other”.

Illustrating the relationship between Hillside and Eskom, Pillay says that if loadshedding on heavy power consumers was ended, Hillside’s production would only increase in the order of about 6 000 t/y to 9 000 t/y, as the plant’s teams have optimised operations around loadshedding occurrences.

As for future power considerations at Hillside, Kerr points out that in the interim between now and when the smelter’s current power contract with Eskom expires in 2031, both parties have been at work regarding potential methods to green the power network over time, with a few joint studies being undertaken together in this regard.

MOZAL ALUMINIUM

South32 is also continuing to seek what Kerr says is a more economically feasible power purchase price in Mozambique to operate the country’s biggest industrial employer – the Mozal Aluminium smelter.

He adds that no new developments have occurred between the company’s mid-August announcement of little confidence being reached in negotiations between it, the government of Mozambique, Hidroeléctrica de Cahora Bassa (HCB) and Eskom on securing sufficient and affordable electricity supply to enable Mozal to operate beyond March 2026, when the current agreement expires.

Although HCB supplies power to Mozal, the former has curtailed its original allocation of 950 MW to about 350 MW as water levels in the hydroelectric dam have receded following a persistent drought, leaving a 600 MW shortfall that Kerr says will require additional negotiations with other potential suppliers (including Eskom) to secure.

As a result, Mozal’s 2026 financial year production is expected to be about 240 000 t, reflecting fewer pots in operation as the company stops pot relining and plans to halt production in March 2026, after which the plant will be put into a state of care and maintenance.

In terms of a final date by which South32 needs to make the call on whether to suspend operations at Mozal, Kerr says that as the “back end of the calendar year” approaches, the company will have to “start making specific decisions” about Mozal.

Mozal’s operating costs are another reason for the smelter’s looming demise. In terms of operational costs and efficiency, Kerr notes that while Hillside currently fits into the fold as a third-quartile producer, “maybe pushing to the upper end of third quartile” on the cost curve, Mozal is lower than that.

According to information from analyst firms such as Wood Mackenzie and CRU, Kerr points out that some of the highest operational cost smelters outside of China have power purchase contracts ranging at about $50/MWh.

“[These smelters] really struggle to survive; they’re all in and out of problems.

“Fair to say, the first offer we got from [the] government of Mozambique is well in excess of that. What we can’t do is operate a smelter where we lose money every single day, week and year,” he says.