South32 has warned that its Mozal aluminum smelter in Mozambique may shut down in March 2026, after efforts to renegotiate its power supply agreement hit a deadlock.
“With negotiations at an impasse, the most likely outcome is that Mozal will continue operating until the current electricity contract expires and then move into care and maintenance,” said Rob Jackson, South32’s vice president of supply, in a letter.
The closure would place 2,500 direct jobs and contractor positions at risk in a country already struggling with high youth unemployment. Aluminum, Mozambique’s third-largest export in 2023, generated $1.1 billion — all sourced from Mozal. Anticipating the shutdown, South32 booked a $372 million impairment on Thursday, sending its shares 6.3% lower on the Johannesburg Stock Exchange by late afternoon.
Mozal was launched 25 years ago, shortly after Mozambique emerged from a devastating 16-year civil war. At the time, South Africa had some of the world’s cheapest electricity, enabling South32’s predecessor to secure a preferential deal: no corporate income tax and just a 1% royalty on sales.
The smelter is powered by South Africa’s Eskom Holdings SOC Ltd., which also buys electricity from Cahora Bassa, Mozambique’s state-owned hydropower company. But with President Daniel Chapo — who took office earlier this year — pledging to overhaul legacy agreements during renegotiations, the deal’s renewal has become uncertain.
While Mozal’s closure poses risks to jobs and exports, it could release 950 megawatts of power back into Mozambique’s grid. Joaquim Ou-Chim, CEO of Electricidade de Moçambique, said last month that the surplus could be sold regionally.
Such power would be quickly absorbed: copper producers in Zambia and the Democratic Republic of Congo are facing severe shortages. Electricity already ranks as Mozambique’s fourth-largest export, worth $689 million in 2023.
