Australian mining giant shuts down international operation after failed talks with Eskom
Australian-headquartered South32 is set to close its Mozal Aluminium smelter in Mozambique after failing to secure an affordable power supply agreement with Eskom and the Mozambican government.
The agreement under which electricity is supplied to Mozal was due to expire in March 2026, with the majority of Mozal’s power generated in Mozambique by a hydroelectric power generator.
When the state-owned hydroelectric power generator, Hidroeléctrica de Cahora Bassa (HCB), failed to meet Mozal’s demand, Eskom would step in.
On top of negotiations that have lasted six years to find a new electricity price tariff, HCB also indicated that drought conditions have impacted its electricity generation capacity.
In December 2025, the National Transmission Company of South Africa, a subsidiary of Eskom, said it remained committed to reaching a new agreement, with the prior agreement set to end on 15 March 2026.
However, the negotiations have failed to generate a result, with South32 now announcing that Mozal was placed under care and maintenance on 15 March 2026.
“We have engaged extensively with the Government of the Republic of Mozambique, Eskom and other key stakeholders, but were unable to secure sufficient and affordable power supply for Mozal beyond March 2026,” said South32 CEO Graham Kerr.
“While this is not the outcome we wanted, we are proud of the history and significant contribution Mozal has made to the local community and the Mozambican economy in its 25 years of operation.”
One-off costs to place Mozal into care and maintenance, including separation costs and termination of contracting arrangements, are roughly US$60 million (R1 billion).
The ongoing annual care and maintenance costs are approximately $5 million (R85 million).
The alumina supplied from the group’s Worsley Alumina refinery to Mozal will now be sold to third-party customers at index-linked prices.
Mozal is located near Maputo, Mozambique, and previously supplied high-quality, primary
aluminium for domestic and export markets.
South32 holds 63.7% of Mozal, the Industrial Development Corporation of South Africa Limited holds 32.4%, and the Government of the Republic of Mozambique holds 3.9%.
With a $2 billion investment, the smelter was the largest private investment in the country, and the first large, direct foreign investment, which helped rebuild Mozambique after a period of unrest.
Image: Bloomberg. This article has been updated.
Loading ...