Mozambique: IMF warns of economic risks from Mozal aluminium smelter closure

The International Monetary Fund (IMF) recognises that the announced suspension of activity at Mozal, Mozambique’s largest industry and one of the largest aluminium smelters in Africa, poses a risk to the country’s economy. The position, outlined in an IMF assessment of the Mozambican economy as part of its regular consultations, approved on 13 February, notes that risks to Mozambique’s economic outlook are currently “strongly negative”, citing Mozal as an example, which represents 4% of gross domestic product (GDP). External risks facing Mozambique, according to the IMF, include “pandemics, natural disasters, regional conflicts, reductions in external aid and volatility in commodity prices”, while internal risks “include rising insecurity” in Cabo Delgado, which “may delay” liquefied natural gas projects, “foreign exchange shortages and weak non-mining sector performance”.

“The ongoing negotiations over electricity tariffs with Mozal represent additional risks. Positive risks include LNG production coming online earlier than expected at the Eni Coral North project,” the report notes, also highlighting that “fiscal vulnerabilities may intensify due to spending pressures and state-owned enterprise losses.” “What complicates domestic debt refinancing,” warns the IMF evaluation, which forecasts that Mozambique’s economy grew 0.5% in 2025, down from 2.1% the previous year. The Mozambican trade union central, Organização dos Trabalhadores de Moçambique – Central Sindical (OTM), warned on Friday that the Mozal shutdown represents a “national earthquake” due to its weight in the economy and potential layoffs.

“If this forecast materialises, we will be facing a kind of national earthquake, whose magnitude will be felt immediately, as this multinational contributes significantly to GDP, approximately 4%, being one of the largest industries in the country, driving exports and generating thousands of direct and indirect jobs,” said Damião Simango. The warning comes after Mozal informed the company’s union committee earlier this month of its intention to proceed with a collective redundancy as part of the planned suspension of activity on 15 March, due to a dispute over electricity tariffs for the aluminium smelter. On 12 February, reported that Mozal would proceed with a collective redundancy in March, as communicated to the union committee of the smelter, which directly employs over 1,000 workers.

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The document sent to the union cited the “collective redundancy consultation process” and associated compensation package, within the dispute over electricity supply to the smelter. Australian company South32 confirmed on the same day that it would suspend Mozal’s aluminium smelter operations on 15 March, despite government efforts to resolve the tariff dispute. “It will enter a care and maintenance regime in March 2026 due to the inability to guarantee sufficient and affordable electricity supply,” said Graham Kerr, Chief Executive of South32, Mozal’s majority shareholder.

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