SOUTH32 confirmed its Mozambique aluminium smelter Mozal will be put on care and maintenance next month amid last minute efforts by local authorities to deliver a price for electricity that would keep the facility operating.
Mozambique’s mineral resources and energy minister Estevao Pale told Reuters on Monday his government was doing “everything that is required” to keep the smelter open. Sources told Miningmx, however, Mozal’s fate was sealed.
“Unfortunately, the reality is we’re running out of things in the next week or so, of pitch and coke, and even if we found a power contract today, that could not be delivered to us in time to keep the plant running,” Graham Kerr CEO of South32 said in an interim earnings call on Thursday.
The miner reported underlying earnings of $435m for the six months to 31 December, exceeding analyst estimates of $386.6m and driving shares up 5%.
South32 impaired its investment in Mozal by $372m last year after failing to secure affordable power beyond March 2026. Drought has crippled Mozambique’s hydroelectric supply, whilst negotiations with South Africa’s Eskom for backup power proved unsuccessful.
The closure threatens more than 4,000 direct and indirect jobs, representing one-third of Mozambique’s manufacturing employment. Alumina previously processed at Mozal will likely be redirected to Middle Eastern facilities, Kerr told analysts.
Kerr, however, raised the prospect Mozal could one day be resuscitated which is why the company would keep it on care and maintenance rather than move to a closure. “We wouldn’t be looking to go into full closure mode until the HCB (Hidroeléctrica de Cahora Bassa) power contract and future was understood,” he said.
“Once they do come back online, they’ve got a lot of power and not a lot of offtakers. So this could become viable going forward,” he said. “The challenge I would say is that restarting a smelter after a number of years is very difficult. It’s not like a mine. So that’ll be a challenge.”
Strong commodity prices for copper, silver and aluminium, combined with lower controllable costs and the restart of Australian manganese operations, drove the earnings improvement, said Reuters in its coverage. The manganese division returned to profit with earnings of $66m, reversing a $34m loss from cyclone disruptions.
South32 declared an interim dividend of 3.9 cents per share, up from 3.4 cents previously, the newswire said.
Hillside
Kerr was more upbeat about the chances of renewing a power agreement with South African utility Eskom that would keep its 720,000 tons a year aluminium smelter open. The smelter’s current contract expires in 2031.
“Every single week and year Eskom is making progress on renewables and nuclear coming into their network. We are working closely with them over time to get a more balanced solution. What we do have is time,” said Kerr.
Unlike Mozambique’s HCI, Eskom was more flexible on tariffs while about 30% of Hillside production was sold locally creating significant incentives for the South African government, which owns Eskom.
