South32 estimates €104M in costs from March shutdown of Mozambican smelter Mozal

Australian mining firm South32 estimates extraordinary costs of 104 million euros ($117 million) stemming from the operational shutdown of Mozal—Mozambique’s largest industrial facility—where production fell by 30% and sales dropped 22% in fiscal year 2026, which ended on June 30. According to the group’s quarterly report released today, these charges include $33 million (€28 million) associated with severance payments and contract terminations, as well as accounting write-downs of $89 million (€76 million) related to raw materials, consumables, and inventory following the smelter’s transition to care and maintenance status on March 15. Mozal directly and indirectly employed over 4,000 workers.

It produced 248,000 metric tons of aluminum up to March 2026—a 30% decline compared to the 355,000 tons recorded in the previous fiscal year—while sales fell from 351,000 to 275,000 tons, representing a 22% drop. The smelter, one of the largest in Africa, served as one of Mozambique’s primary industrial exporters and key generators of foreign exchange. Between April and June—the final quarter of fiscal year 2026 and the first full quarter following operational suspension—the facility recorded zero production, relying exclusively on the sale of 46,000 tons of remaining inventory.

The operational shutdown followed months of failed negotiations over the power supply tariff required to run the facility located on the outskirts of Maputo City. South32 previously characterized the proposed electricity tariff as “completely unsustainable,” attributing the shutdown decision to the inability to secure power at costs compatible with commercial operations. In an investor call in March, former CEO Graham Kerr explained that the only formal proposal available priced power near $100 per megawatt-hour—nearly double what the company considered viable to sustain production.

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According to South32, energy accounts for roughly one-third of Mozal’s cost structure. The company advocated for a price cap around $51 per megawatt-hour. The smelter requires approximately 950 megawatts of continuous baseload power, historically supplied byHidroeléctrica de Cahora Bassa(HCB) routed via South Africa’s Eskom grid, under a supply agreement that expired in March.

South32, which holds a 63.7% stake in Mozal, also cited drought conditions impacting the Cahora Bassa reservoir as a factor limiting regional power availability. While South32 previously noted it has not ruled out restarting production if energy and macroeconomic conditions improve, the group announced on July 1 the sale of a portion of its global aluminum assets to U.S.-based Alcoa Corporation for up to $5.6 billion (€4.8 billion). Mozal was excluded from that transaction, remaining under South32’s control while management evaluates “various strategic options” for the smelter’s future.

Meanwhile, South Africa’s Industrial Development Corporation (IDC)—which holds a 32.48% stake in Mozal—launched a tender in June to hire independent consultants to evaluate acquiring South32’s majority stake and analyze the feasibility of restarting operations. The South African state entity aims to assess the risks, costs, and conditions of a potential buyout, including alternative long-term energy sourcing solutions to ensure the smelter’s viability.

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