SOUTH32 has raised major doubts about the sustainability of aluminium production from its facilities in Mozambique, saying in an update on Monday it had failed to reach agreement on a power supply agreement.
The group has been negotiating with Mozambique’s hydroelectric power operator Hidroeléctrica de Cahora Bassa (HCB) for a renewal of a power supply agreement which is due to expire in March next year.
Mozal gets its power from the Cahora Bassa hydro-electric scheme on the Zambezi River in Mozambique which also supplies power to Eskom, the South African power utility. In terms of Mozal’s power agreement, Eskom provides emergency power in the event of interruptions from HCB.
Mozal has been unable to agree an affordable electricity price tariff in about six years of negotiations. Now, however, the situation has become complicated by drought conditions in Mozambique which South32 said had the potential to “impact HCB’s electricity generation and capacity to deliver sufficient hydro-electric power to Mozal”.
These factors have resulted “in increased uncertainty regarding future electricity supply to Mozal,” the group said.
“Given the uncertainty of operating beyond March 2026, FY26 production guidance for Mozal is under review,” the Perth-headquartered group said in a statement.
South32 also raised the possibility it might book an impairment at Mozal which is forecast to produce 350,000 tons of aluminium in the 12 months ended June. Said the group: “We are assessing the carrying value of Mozal given the increased uncertainty regarding future electricity supply and expect to recognise an impairment expense in our FY25 results.”
South32 had targeted 2026 as the year in which it returned Mozal to its nameplate 370,000 tons a year production after it only produced 314,000 tons in 2023/24. Prior to violent protests in Mozambique, following disrupted elections in October, South32 had forecast production of 360,000 tons for the 2025 financial year.
About 20 kilometres west of Maputo, Mozambique’s capital, Mozal is the biggest industrial employer in the Southern African country.
