South32 is to place Mozal Aluminium on care and maintenance after it failed to secure a sufficient and affordable power supply for the facility beyond March.
South32 CEO Graham Kerr said on Monday the decision followed six years of extensive engagements with the Mozambican government, Eskom and other stakeholders.
While this is not the outcome we wanted, we are proud of the history and significant contribution Mozal has made to the local community and the Mozambican economy in its 25 years of operation
— South32 CEO Graham Kerr
“While this is not the outcome we wanted, we are proud of the history and significant contribution Mozal has made to the local community and the Mozambican economy in its 25 years of operation,” Kerr said.
The decision was not unexpected. Business Day reported in February that Kerr said he was past the point of negotiating for a new electricity supply plan in Mozambique.
The diversified miner announced in August last year it would place Mozal on care and maintenance thanks to the unaffordability of Eskom’s power and retrench its about 5,000-strong workforce, placing thousands more in indirect jobs at risk as a result.
The decision came after failed negotiations in 2025 with Eskom, the Mozambican government and Mozambique’s leading hydropower group, Hidroeléctrica de Cahora Bassa, over a new power purchase agreement for 2026.
“We have been clear that we’re past the point of any new power supply agreement,” Kerr said in an interview with Business Day in February. “We no longer have the raw materials necessary to keep the plant running; we stopped buying them in December.
“Smelters are not like mines; you cannot stop and start them. It takes a huge amount of money to restart operations.”
Mozal is located near Maputo, and the smelter produced high-quality, primary aluminium for domestic and export markets.
South32 holds 63.7% of Mozal; South Africa’s Industrial Development Corporation (IDC) holds 32.4%; and the Mozambican government holds 3.9%.
As previously announced, one-off costs to place Mozal into care and maintenance, including employee separation costs and termination of contracting arrangements, are about $60m, or just over R1bn. Ongoing annual care and maintenance costs are about $5m (R84.28m).
“The alumina supplied from our Worsley Alumina refinery to Mozal will now be sold to third-party customers at index-linked prices,” Kerr said.
The rising cost of Eskom’s electricity has placed a heavy burden on smelters in Southern Africa in recent years, leading to several operations in South Africa being idled.
In December last year, the Glencore-Merafe chrome venture issued thousands of retrenchment notices at two smelters in the North West. In the preceding four years, it cut 1,800 jobs as it closed 10 of its 22 furnaces due to unsustainable electricity costs.
In January, however, the national energy regulator (Nersa) granted Samancor and the Glencore-Merafe venture a 35% tariff relief in a desperate bid to save the smelters and thousands of jobs.
“I would argue that, even at Mozal, we could’ve had a contract that would have been affordable to Eskom and above their cost of production,” Kerr said at the time.
“[But] the offer they [Eskom] put on the table [for Mozal] was about $100 (R1,685.64)/MWh, which is more than two times that of any other smelter in the West.”
With Jacob Webster
Business Day
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