- Mozal aluminium smelter in Mozambique placed on care and maintenance from 15 March 2026 after failure to secure competitive electricity tariff.
- Closure affects about 4,000 direct jobs and up to 20,000 indirect jobs across the regional economy.
- At the same time, a confidential electricity pricing agreement in South Africa reveals Hillside smelter could receive about R92 billion in power discounts over 10 years.
South32 has officially placed the Mozal aluminium smelter in Mozambique on care and maintenance with effect from 15 March 2026 following the breakdown of negotiations to secure a competitive long term power supply agreement.
The decision comes after six years of discussions aimed at establishing a new electricity tariff to replace the existing arrangement that expired in March 2026. The inability to reach an agreement has forced the company to halt operations at the large scale aluminium facility.
Mozal was a significant component of South32’s aluminium portfolio, accounting for about 29% of the company’s total aluminium production in FY25. The shutdown carries substantial economic implications for the region, affecting approximately 4,000 direct employees and contractors, while an estimated 20,000 indirect jobs across the local supply chain may also be impacted.
Operational challenges were compounded by reduced generating capacity at Mozambique’s Hidroeléctrica de Cahora Bassa hydroelectric plant due to persistent drought conditions, which limited the availability of reliable and competitively priced power.
As a result of the closure, alumina from South32’s Worsley Alumina refinery in Western Australia, which was previously supplied to Mozal, will now be redirected to third party customers and sold at index linked prices.
The company expects to incur one off costs of about US$60 million related to employee separations and contract terminations. Ongoing care and maintenance expenses are estimated at about US$5 million per year. South32 had already recognised a US$372 million impairment in FY25 associated with the shutdown.
South32’s Hillside aluminium smelter in South Africa
The development stands in contrast to developments in South Africa involving South32’s Hillside aluminium smelter in Richards Bay, which operates under a confidential electricity pricing agreement with Eskom.
Analysis of the full unredacted negotiated pricing agreement obtained by the non-profit organisation Open Secrets reveals that Hillside could benefit from electricity discounts potentially worth about R92 billion over a 10 year period.
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The agreement, signed in 2021, covers electricity supply to the Hillside smelter, the largest aluminium smelter in the southern hemisphere. The facility consumes nearly 6% of Eskom’s total electricity output, making the pricing arrangement significant for the utility’s financial position. Read more
Eskom had previously refused to disclose details of the agreement after an access to information request submitted in March 2024. The utility argued that releasing the information could weaken its position in future electricity pricing negotiations with other large customers.
The refusal drew scrutiny given a 2013 Supreme Court of Appeal ruling that compelled Eskom to release an earlier version of the agreement with BHP Billiton, South32’s predecessor, citing the clear public interest in the information.
When that earlier agreement became public, it revealed that the aluminium producer had been paying only about 15% of the electricity tariff paid by ordinary consumers, triggering widespread public criticism.
Energy consultancy Meridian Economics analysed the newly released agreement for Open Secrets and compared its terms with Eskom’s standard Megaflex tariff applied to large industrial users without special pricing arrangements.
The analysis estimates that the discount for the current financial year alone could be as high as R10 billion, with South32 already benefiting from approximately R25 billion in reduced electricity prices since the deal came into effect.
Over the full duration of the 10 year agreement, Meridian estimates that the effective discount could reach about 50%, representing roughly R92 billion in foregone revenue for Eskom. Read more
Author: Bryan Groenendaal
