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South32 Ltd on Tuesday said it has been unable to secure a new electricity supply agreement for Mozal, meaning the aluminium smelter in Mozambique will be placed on care and maintenance next year. The Perth-based diversified mining group said the current agreement expires in March 2026, which is when Mozal will be placed on care and maintenance. South32 holds 63.7% of Mozal, which is an aluminium smelter located near Maputo, the capital of Mozambique. Historically, the majority of electricity for Mozal has been generated in Mozambique by a hydro-electric power generator, Hidroelectrica de Cahora Bassa. HCB is majority owned by the Mozambican government. Electricity from Eskom Holdings SOC Ltd, the state-owned electricity supplier of South Africa, is supplied to Mozal when HCB is unable to meet all of Mozal’s electricity requirements. South32 had engaged with the Mozambican government, HCB and Eskom to find an electricity supply for Mozal, but said it was unable to do so. ‘Unfortunately, the parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB,’ said South32 Chief Executive Graham Kerr. South32 said Mozal’s financial 2026 production guidance for the period to March is unchanged at 240,000 tonnes. The company expects one-off costs to place Mozal into care and maintenance, including employee separation costs and termination of contracting arrangements, to be approximately $60 million. Ongoing annual care and maintenance costs are expected to be approximately $5 million, according to South32. In August, South32 had announced that it planned to place Mozal on care and maintenance if it could not access ‘sufficient and affordable’ electricity by end of March next year. The company had said in August it would start to limit investment in Mozal, stopping pot relining and standing down associated contractors. ‘We understand today’s announcement is difficult for our team at Mozal and we are focused on supporting them through this process,’ said South32 CEO Kerr. ‘We also acknowledge the impact this will have on our suppliers, customers, communities and other stakeholders, and we are engaging with them as we transition from operations to care and maintenance in the coming months.’ Shares in South32 were down 1.2% to 170.80 pence on Tuesday morning in London. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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