Mozal, South32’s aluminium smelter in Mozambique, is facing uncertainty over its future electricity supply due to expiring agreements and affordability issues.
The Australian miner, which is listed on the JSE and has operations in SA, said its existing electricity supply contract for Mozal, which was critical to its operations, was set to expire in March 2026.
Despite six years of negotiations with Hidroeléctrica de Cahora Bassa (HCB) and Eskom, it has been unable to agree on an affordable electricity price tariff, the miner said in a statement on Monday.
South32 said drought conditions, which may affect HCB’s electricity-generation capacity, had further compounded the uncertainty about future electricity supply to Mozal.
As a result, South32 said it expected to recognise an impairment expense in its 2025 financial results due to the increased uncertainty regarding future electricity supply. The company’s full-year 2026 production guidance for Mozal was also under review.
Mozal produces primary aluminium and contributes about 3% of Mozambique’s GDP. South32 holds a 63.7% stake in the smelter, alongside the Industrial Development Corporation of SA with 32.4%, and the Mozambican government with 3.9%.
Primary aluminium is produced directly from the smelting of alumina (aluminium oxide) through the electrolysis process, as opposed to secondary aluminium, which is produced from recycling aluminium scrap. Primary aluminium is used in applications where high purity and specific properties are required, such as in the aerospace, automotive and construction industries.
Electricity for Mozal is primarily sourced from HCB, a hydroelectric power generator majority-owned by the Mozambican government. Eskom provides supplementary electricity when HCB’s supply falls short.
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