South32 says to mothball Mozal; flags $372 million hit
The diversified miner has been in protracted negotiations with Mozambique's government over a power agreement that is set to expire in March, 2026. It warned in July that it may face an impairment at the smelter during fiscal 2025 and was reviewing production after failing to secure affordable power.
"Based on engagements to date, we do not have confidence that Mozal will secure sufficient and affordable electricity when the current supply agreement ends," CEO Graham Kerr said in a statement.
"It is not viable for Mozal to operate under the tariff indicated. The price expectations of counterparties would make Mozal internationally uncompetitive," he said.
South32 said that given care and maintenance was the most likely scenario, it would curtail activities such as pot relining and would limit further investment in the operations.
South32 said it has since continued engagement with the Mozambique government, hydroelectric producer Hidroeléctrica de Cahora Bassa (HCB) and South African utility Eskom since July.
Shuttering the smelter is not a done deal, if the two parties can reach agreement on costs.
'We are hopeful a workable solution emerges that enables Mozal to operate beyond March 2026, and maintain its substantial contribution to Mozambique,' Kerr added.
HCB, majority-owned by the Mozambique government, is the primary power supplier to Mozal. When it cannot meet the smelter's needs, Eskom steps in under the current agreement.
The miner expects its share of Mozal's output in fiscal 2026 to fall to about 240 kilo tons, compared with 355 kilo tons in 2025.
July was the second time South32 flagged impairments at its Mozal project. In December, nationwide protests in Mozambique disrupted operations and weighed on production.
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