South32 shuts Mozal aluminium smelter after Eskom and HCB power talks collapse

Twenty-five years of production in Maputo end after six years of failed negotiations over electricity pricing amid drought-hit hydropower supply

RMRoy Mulenga

16 March 20262 min read

South32 has placed its Mozal aluminium smelter near Maputo on care and maintenance with effect from 15 March 2026, ending 25 years of primary aluminium production after the company failed to secure an affordable long-term electricity supply agreement. South32 chief executive Graham Kerr said the company had spent six years in discussions with the Mozambican government, Hidroeléctrica de Cahora Bassa (HCB) and South Africa's Eskom trying to resolve the smelter's power situation before concluding that no viable deal was achievable.

Mozal is 63.7% owned by South32, with South Africa's Industrial Development Corporation holding 32.4% and the Mozambican government the remaining 3.9%. Placing the plant into care and maintenance is expected to cost approximately $60 million in one-off charges, including employee separation and the termination of contracting arrangements, with ongoing care and maintenance costs of around $5 million a year.

A price deadlock made worse by drought

Mozal draws its power via Eskom from HCB's Cahora Bassa hydroelectric plant on the Zambezi River, which supplies about two-thirds of Eskom's electricity purchases from Mozambique. Years of drought reduced water availability for hydropower generation across the region, sharpening the pricing dispute as HCB and Eskom sought higher tariffs to reflect the smelter's enormous, near-constant power draw, while South32 argued it could not sustain aluminium production at those prices given global metal markets.

Knock-on effects for alumina and the economy

With Mozal no longer taking feedstock, South32 said it will redirect alumina previously supplied from its Worsley Alumina refinery in Australia to third-party customers at market-linked prices instead. The shutdown is a significant blow to Mozambique's economy: Mozal alone has been estimated to use nearly half the country's electricity output and to account for around 3% of gross domestic product, making its closure one of the most consequential industrial power failures in the region in recent years. Restarting the smelter would require exactly the kind of long-term, competitively priced power agreement that eluded negotiators for six years — a reminder of how directly aluminium smelting, one of the most power-intensive industrial processes, depends on cheap and abundant electricity to remain viable.