Africa’s second-largest aluminium smelter could halt operations in March after its owner, South32 Ltd., failed to secure a new electricity supply agreement before the current deal expires.
The Mozal plant, located just outside Mozambique’s capital, Maputo, will become unviable under a proposed new tariff set to replace its existing rate early next year, the company said.
Rob Jackson, South32’s vice president of supply, said negotiations remain deadlocked.
“The most likely scenario is for Mozal to continue operating until the current electricity supply agreement expires, after which it would be placed on care and maintenance in March 2026,” he said.
A shutdown would threaten the jobs of 2,500 workers and contractors in a country already struggling with high youth unemployment, Bloomberg reported.
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Aluminium was Mozambique’s third-largest export in 2023, bringing in $1.1 billion, all from Mozal.
South32 has already recorded a $372 million write-down linked to the potential closure, and its shares fell 6.3% on the Johannesburg Stock Exchange by late Thursday afternoon.
If operations stop, about 950 megawatts of power could be freed up.
Joaquim Ou-Chim, CEO of state-owned Electricidade de Moçambique, has indicated the electricity could be sold regionally to meet surging demand from copper producers in Zambia and the Democratic Republic of Congo, both facing severe shortages.
Electricity was Mozambique’s fourth-largest export last year, generating $689 million.
The potential closure comes as the government pursues an ambitious goal of connecting 300 million people in sub-Saharan Africa to electricity by 2030, in a region where more than 80% of the world’s 680 million people without power live.
Mozambique is also moving toward a future powered by both sustainable energy and liquefied natural gas (LNG).
Plans include restarting TotalEnergies’ $20 billion LNG project and securing World Bank financing for what would be Southern Africa’s largest hydropower project in five decades.
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Image Credit: Bloomberg
