Diversified natural resources group South32 has warned that it may have to put the Mozal aluminium smelter on care and maintenance in early 2026, as it struggles to secure sufficient and affordable electricity to operate the smelter.

The Australia-, Johannesburg- and London-listed group has been in negotiations with the government of Mozambique, hydropower producer Hidroeléctrica de Cahora Bassa (HCB) and South Africa's power utility Eskom to secure the necessary electricity supply to enable Mozal, in which South32 holds a 63.7% stake, to operate beyond March 2026, when the current power supply agreement expires.

Under the current agreement, electricity is supplied to Mozal by Eskom when HCB is unable to meet all of Mozal’s electricity requirements.

“Based on engagements to date, we do not have confidence that Mozal will secure sufficient and affordable electricity when the current supply agreement ends in March 2026. It is not viable for Mozal to operate under the tariff indicated. The price expectations of counterparties would make Mozal internationally uncompetitive," says South32 CEO Graham Kerr. 

The group has, therefore, taken the decision to limit investment in the smelter, to stop pot relining and to stand down associated contractors starting this month.

“With care and maintenance the most likely scenario, it is no longer appropriate to continue activities such as pot relining and we will limit further investment in Mozal. We acknowledge the impact today’s announcement will have on our people and we will support them through this process.

“We’re proud of Mozal’s 25-year history and its economic and social contributions to the country. We are hopeful a workable solution emerges that enables Mozal to operate beyond March 2026, and maintain its substantial contribution to Mozambique,” Kerr adds.

In the meantime, South32 has completed a previously announced carrying value assessment of Mozal, given the increased uncertainty regarding future electricity supply, and will recognise an impairment of $372-million for Mozal in the 2025 financial year.

The impairment reduces Mozal’s carrying value to $68-million.

South Africa's Industrial Development Corporation holds a 32.4% stake in Mozal and the Mozambique government a 3.9% share.