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IOL News
6 days ago
- Business
- IOL News
South32's Mozal Aluminium closure by March 2026 a big blow for Mozambique economy
South32 operates Mozal Aluminum in Mozambique. The smelter employed over 2500 staff last year, but is being put on care and maintenance from March next year due to an inability to reach agreement on a new electricity supply agreement. Image: Supplied South32 said its Mozal Aluminium facility, the biggest industrial employer in Mozambique with over 2 500 staff, will be put on care and maintenance when its electricity agreement expires at the end of March 2026. Apart from the employees and contractors that were employed at Mozal in 2024, an estimated additional 21 000 jobs had been created through multiplier impacts on the economy, the mining group said. South32's share price plunged 5.83% to R33.41 on the JSE early Thursday morning. South32 said in a notice on Thursday that it had continued to engage with the Mozambique government, Hidroeléctrica de Cahora Bassa (HCB), and Eskom on securing additional electricity, as it has been trying to secure an agreement for over six years. South32 also operates the Hillside smelter in Richards Bay, with both smelters supplied with alumina that is mostly mined and imported from Australia. The impact stretches beyond the direct workforce at Mozal, as the facility supports not only smelting operations but also downstream industries and infrastructure development. Anchor Capital analyst Robbie Proctor said the smelter is very important to the Mozambique economy, as it contributed 4% of Mozambique's GDP, and the aluminium exports made up 15% of that country's total goods exports. 'These engagements do not provide confidence that Mozal will secure sufficient and affordable electricity beyond March 2026. As a result, we will limit investment in Mozal, stopping pot relining and standing down associated contractors starting this month,' the global mining group said. South32 would incur an estimated R6.53 billion impairment as a result of the closure. Historically, most of the electricity for Mozal has been generated in Mozambique by a hydroelectric power generator, Hidroeléctrica de Cahora Bassa (HCB). HCB is owned by the Mozambique government. Under the agreement, electricity from Eskom is supplied to Mozal when HCB is unable to meet all of Mozal's electricity requirements. HCB recently indicated that drought conditions might impact its capacity to deliver sufficient hydroelectric power to Mozal, which had increased the uncertainty regarding future electricity supply to Mozal. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ 'Without access to sufficient and affordable electricity, we expect that Mozal will be placed on care and maintenance at the end of the current agreement,' it said. Proctor said the primary stumbling block has been the electricity tariff. He said another complicating factor behind the talks between the parties was likely to the current agreements also in place between Eskom and Mozambique's energy company, as around two-thirds of the electricity from Cahora Bassa is exported to South Africa. He said the Mozambique government wants Mozal to be supplied directly by the Mozambican energy company, rather than power being sold to Eskom and then being bought back by Mozambique's transmission company. 'So it's more complicated than just renewing the existing agreement with Eskom, as was the case with the Hillside smelter,' said Proctor. Mozal's 2026 financial year production was expected to be about 240kt (South32 share), reflecting fewer pots in operation as pot relining stops and operations continue only to March 2026. Mozal produced 318 000 tons of aluminium in 2024. Hillside, which is Eskom's biggest industrial customer, produced 718 000 tons of aluminium last year. A carrying value assessment of Mozal had been completed, and as a result, South32 would recognise an impairment of $372m for Mozal with its financial results for the 2025 financial year.
IOL News
28-05-2025
- Business
- IOL News
Harmony Gold's R18bn acquisition of CSA Copper mine: a strategic move into copper
A Harmony Gold local mine. Harmony Gold's acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company's diversification strategy and foray into copper. Image: Supplied Harmony Gold's acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company's diversification strategy and foray into copper. Copper, deemed a future proofing mineral, has been the center of merger and acquisition activity among South African and global miners. Now, Harmony Gold, with its diverse footprint of gold in South Africa, is intensifying its exposure in copper. 'The large brownfields projects being pursued by the group are all in copper, signifying Harmony Gold's strategy to diversify away from gold. However, Harmony will predominantly remain a gold producer even after the slated developments are scheduled to come on-stream,' Robbie Proctor, an investment analyst at Anchor Capital, told Business Report on Tuesday. The company entered into a binding agreement acquisition to acquire 100% of the securities in New York listed MAC Copper Limited for $12.25 (R219) per share, implying a total equity value for MAC of $1.03bn, or about R18.4bn. Despite this, shares in Harmony Gold fell by 5.75% in afternoon trade on the JSE to R256.36, erasing the previous seven days' 5.63% appreciation run. Proctor said, 'Copper has the most favourable long-term demand outlook amongst the major commodities while the supply side is just as favourable' at the moment. 'A mine of this size is relatively inconsequential for the large diversified miners like Anglo American, BHP Group and Glencore, providing the opportunity for smaller players to acquire operating copper mines at reasonable valuations. The CSA mine was actually acquired from Glencore in 2023,' added Proctor. Harmony Gold CEO Beyers Nel described the Australian mine Harmony Gold was acquiring as 'a logical fit with the portfolio' as it meets the company's 'core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity' prices. He said the acquisition of the CSA Copper Mine in Australia was significant for the company as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio and explained that the CSA mine was one of the highest-grade copper mines in Australia. It produced 41 000 tonnes of copper in calendar year 2024,' said 'We believe that Harmony is well positioned to leverage its expertise in underground mining to further enhance operations. Furthermore, the Transaction represents a significant step forward in transforming Harmony into an increasingly de-risked, higher-quality, global gold and copper producer through disciplined and effective capital allocation,' added Nel. Harmony Gold intends to fund the transaction with a $1.25bn bridge facility together with existing cash reserves. The gold miner has entered into a binding commitment letter with a number of banks that have arranged to underwrite the facility. These include Citibank as global coordinator, initial mandated lead arranger and bookrunner. J.P. Morgan Securities has also been roped in as global coordinator, initial mandated lead arranger while Macquarie Bank Limited will also be involved. The financing facility has a tenure of 364 days plus a 6-month extension, exercisable at the discretion of the company. Earlier this year, Nel said the operating environment in South Africa had started to stabilise, helping the company to lift up earnings for the half year to December although analysts had varying evaluations of the gold miner's diversification strategy into copper.
