Australian miner South32 will place the Mozal aluminium smelter in Mozambique under care and maintenance by March 2026, after it failed to secure a new electricity supply agreement with the government.
The miner has been negotiating with Mozambique’s government and power suppliers to reach an agreement for the smelter’s energy requirements.
South32 said in July that it had been working with hydro-electric power generator HCB to secure electricity supply to Mozal, but has not been able to agree on an affordable electricity price.
South32 CEO Graham Kerr said: “Throughout our engagements, we emphasised that Mozal’s ability to continue operating depended on securing sufficient electricity at a price which allows the smelter to remain internationally competitive.
“Unfortunately, the parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB.
“We must now turn our attention to safely placing the smelter on care and maintenance from March 2026.”
South32 maintained its production guidance for Mozal for the period to March 2026 at 240,000 tonnes.
One-off costs to place Mozal into care and maintenance, including employee separation costs and termination of contracting arrangements, are expected to be approximately US$60 million, while ongoing annual care and maintenance costs are expected to be US$5 million.
Alumina from South32’s Worsley Alumina refinery will be redirected to third-party customers under index-linked arrangements.
“We understand today’s announcement is difficult for our team at Mozal, and we are focused on supporting them through this process.
“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,” Kerr said.
